Russia Sets 1% Crypto Capital Cap on Banks
The Bank of Russia has proposed a new regulation that sets a 1% capital cap on banks' exposure to cryptocurrencies. This proposal aims to limit covered crypto and foreign-digital-instrument risk to a bank's own funds, while leaving some client custody positions outside the calculation.
The draft regulation would create two levels of measurement: N31 for individual credit institutions and N32 for banking groups on a consolidated basis. Each ratio compares covered exposure with the relevant institution's capital, not its total assets.
Banks would receive limited recognition for hedges under the new rules. Long and short positions may be netted only within the draft's qualifying lower-risk category, which imposes conditions tied to the asset, settlement, and maturity as well as freezing and liquidity risk.