Russia Proposes 1% Crypto Capital Cap to Limit Risk Exposure

Russia's central bank has proposed a 1% crypto capital cap to limit covered crypto and foreign digital instrument risk. The draft regulation would subject individual credit institutions (N31) and banking groups (N32) on a consolidated basis to the same proposed percentage ceiling.

The two-level structure measures the ratio of covered exposure to relevant institution's capital, not total assets. This means that banks would receive limited recognition for hedges, with long and short positions only allowed within a qualifying lower-risk category.

Direct holdings and other higher-risk exposures are measured more conservatively and cannot be fully neutralized by an offsetting position. The treatment of customer assets turns on who bears the loss if assets are seized or transactions are restricted.