In December 2022, the Basel Committee published "Prudential Regulation of Cryptoasset Risks", which sets out prudential requirements for banks' investments in cryptoassets. 
      The requirements are set out in a new chapter of the consolidated Basel framework (SCO60) with an effective date of 1 January 2025. Paragraphs SCO60.128-SCO60.130 describe the disclosure requirements applicable to banks' investments in cryptoassets. The Committee has developed standardised disclosure templates to ensure consistency of disclosure. 
      The templates incorporate the requirements of SCO60.128-SCO60.130 and are set out in a new chapter of the Basel framework: DIS55 Cryptoassets. The Committee expects that the use of common disclosure templates for banks' cryptoasset disclosures will facilitate market oversight and reduce information asymmetry between banks and market participants. 
      As a new chapter of the disclosure standard in the Basel framework, DIS55 will be subject to the general requirements of chapter DIS10, such as scope of application, location and frequency of reporting, timing of disclosures and third party verification of data. 
       The proposed requirements set out in DIS55 would apply to internationally active banks at the top level of consolidated reporting. The Committee proposes an implementation date of 1 January 2025 for DIS55, which is consistent with SCO60.

• Details of the assessment of classification conditions:
  For investments in Group 1 cryptoassets, the CAEA table requires banks to disclose the approach they use to assess compliance with each of the four Group 1 classification conditions, including any public information but excluding confidential and proprietary information. The Committee is considering adding more detail on the information that banks must disclose for each classification condition. Further details are set out in Annex 2 and the Committee would welcome feedback from stakeholders on the appropriateness of a potential addition to the CAEA table.
• Masking:
  The amounts that banks submit under the proposals at the end of the reporting period may not provide an accurate picture of the risk to which banks are exposed if exposure values during the reporting period differ significantly from those at the end of the period. The Committee therefore considers it appropriate to require banks to disclose amounts in the CAE1 template using daily average values in addition to period-end values.
• Materiality: 
  The CAEA table and template CAE1 contain disclosure requirements for banks' "material" investments in cryptoassets. The Committee is considering whether to define what is considered a material investment in this context of cryptoasset investment disclosure and, if so, what the threshold should be. For example, an investment could be considered material if it exceeds 5 per cent of a bank's total investment in crypto-assets. The Committee would welcome feedback on the feasibility and specification of a potential definition of materiality.

DIS55 - Investments in Cryptoassets

Disclosure requirements under this section include:

• CAEA Table:
  Qualitative disclosure of the bank's cryptoasset activities and the approach used to assess the conditions for classification.
• Template CAE1: 
  Cryptoasset investments and capital requirements.
• Template CAE2: 
  Accounting classification of cryptoasset investments and cryptoLiability.
• Template CAE3: 
  Liquidity requirements for investments in cryptoassets and cryptocurrencies.

Classification Condition 1 [SCO60.8] to [SCO60.13]
If the cryptoasset has a stabilisation mechanism, banks must describe the following in relation to the requirements of [SCO60.11]:

• How the stabilisation mechanism operates to minimise fluctuations in the market value of the cryptoasset relative to the peg value.
• The ownership of the reserve assets on which the stable value of the cryptoasset depends.
• How the physical assets on which the peg is based are stored, owned and managed.
• The jurisdiction and regulator of the issuer of the crypto asset (this regulator must apply capital and liquidity requirements to the issuer).
• Where the "public" information was obtained from to ensure the accuracy of the above elements.

If the cryptoasset has a stabilisation mechanism, banks should describe the following in relation to the repurchase risk test set out in [SCO60.12]:

• The value of the reserve assets (book value) and the aggregate pegged value of all tokens issued.
• The frequency of valuation and disclosure of reserve asset data and the quality of the available data.

Classification Condition 2 [SCO60.14] to [SCO60.15]
If the cryptoasset has a stabilisation mechanism, banks should describe the following:

• Arrangements that ensure that the issuer and/or reserve assets provide a full repurchase at pegged value at any time and within five calendar days of the repurchase request.
• Which parties have the right to repurchase, the obligation of the repurchasing party to fulfil the arrangement, the timeframe for fulfilling that repurchase and the traditional assets in exchange, and the determination of the value of the repurchase.
• Where the (public) information was obtained from to ensure the accuracy of the above elements.

Classification Condition 3 [SCO60.16] to [SCO60.17]
Banks shall describe the following:

• The risks of the network in which the cryptoasset operates and how these are mitigated, managed and controlled.
• The risk management and risk control policies of entities performing activities related to cryptoasset functions, such as issuing, validating, redeeming and transferring cryptoassets to respond to the risks described in SCO60.17.

Classification Condition 4 [SCO60.18] to [SCO60.19]
Banks should describe the following:

• If applicable, the names of the jurisdiction and regulator of the entities that redeem, transfer, hold or finalise the settlement of cryptoassets, or manage or invest reserve assets. If these entities are not regulated and supervised, the risk management standards they have in place.
• The governance mechanism of entities that redeem, transfer, hold or finalise the settlement of cryptoassets, or manage or invest reserve assets.
• Where the (public) information was obtained from to ensure the accuracy of the above elements.

Notes:
[1] Entities include transmission and settlement system operators for the cryptoasset, wallet providers and, for cryptoassets with a stabilisation mechanism, administrators of the stabilisation mechanism and custodians of reserve assets.

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Basel Committee on Banking Supervision (2023). Consultative Document: Disclosure of cryptoasset exposures. Bank for International Settlements. https://www.bis.org/bcbs/publ/d545.htm