Australia Asks Bank to Report on Cryptocurrency Transactions
The Australian Prudential Regulation Authority (APRA), has reportedly requested local banks to improve their reporting on cryptocurrency transactions and provide daily updates.
This move comes as a response to the ongoing contagion of Silicon Valley Bank’s (SVB) collapse and recent collapses in the global banking system.
The APRA has ordered banks to declare their exposures to startups and crypto-related companies. The regulator aims to obtain more information and insight into banking exposures to crypto and associated risks. This step is part of the APRA’s increased banking sector supervision in the aftermath of recent massive collapses.
According to the Australian Financial Review, the APRA has started requesting banks to improve their reporting on crypto assets and provide daily updates to the regulator. The new measures reportedly aim to increase transparency and monitor potential risks associated with crypto transactions. The report cites three sources familiar with the matter.
This move by the APRA comes when the global banking system is experiencing a series of collapses. On March 19, Swiss UBS Group agreed to buy its ailing competitor Credit Suisse for $3.2 billion after the latter collapsed over the weekend. The takeover became one of the latest failures in the banking industry following the collapses of SVB and Silvergate.
Despite the current stability of the Australian banking system, Barrenjoey analyst Jonathan Mott reportedly warned clients that confidence could be quickly disrupted, putting pressure on bank margins. Mott added that deposits were not being withdrawn from smaller institutions of any size, and capital and liquidity buffers were strong. However, this is a crisis of confidence, and credit spreads and the cost of capital will continue to rise. At a minimum, this will add to the margin pressure the banks face, while credit quality will continue to deteriorate.
In addition to the APRA’s move, the Australian Banking Association has launched a cost of living inquiry to study the impact of the COVID-19 pandemic and geopolitical tensions on Australians. This inquiry followed an analysis of rising inflation, suggesting that more than 186 banks in the United States are at risk of a similar shutdown if depositors decide to withdraw all funds.
Overall, the APRA’s move to improve reporting on crypto transactions and increase transparency in the banking sector is a positive step towards preventing potential risks and ensuring the stability of the Australian banking system.