After Silicon Valley Bank’s (SVB) failure, the Australian Prudential Regulatory Authority (APRA) has allegedly asked local banks to report on crypto assets transactions. The APRA has asked banks to report their exposures to new businesses and firms involved in the cryptocurrency industry.
According to the Australian Financial Review report, the APRA aims to obtain more information and insight into banking exposures to crypto and associated risks. The regulator has mandated that banks improve their reporting on crypto assets. They are required to provide daily updates to the APRA, per the report citing three people familiar with the matter,
APRA Urges Banks To Enhance Reporting On Crypto Assets
The APRA has tightened its grip on the banking sector due to recent significant breakdowns in the global financial system, including SVB and Silvergate. Additionally, the APRA’s implementation of new regulations aims to mitigate risks and enhance transparency in the banking industry.
The new request by APRA for a daily update on crypto assets transactions is testimony to the regulators. In addition, this is a continuous focus on encouraging practical approaches to risk management within the banking sector.
APRA aims to prevent potential market disruptions by increasing its scrutiny of cryptocurrencies. Moreover, safeguard the interests of depositors from the adverse impacts of any unforeseen collapses. However, Such proactive measures indicate APRA’s aggressive approach toward ensuring the soundness and stability of the financial system.
Analyst Jonathan Mott from Barrenjoey has observed that the situation for Australian banks “remains stable.” Furthermore, he cautioned that confidence could be quickly disrupted, which can put pressure on bank margins.
Furthermore, Mott said that credit spreads and the cost of capital would continue to rise, adding to the margin pressure banks already face. The news comes as the Australian Banking Association launched a cost of living inquiry to study the impact of the COVID-19 pandemic and geopolitical tensions on Australians.
The inquiry followed an analysis of rising inflation. Therefore, suggesting that over 186 banks in the United States are at risk of shutdown if depositors withdraw all funds. As the banking sector faces increased scrutiny, banks must effectively manage their exposure to crypto and related risks.
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The APRA’s step towards improving transparency in the banking sector and preventing future collapses. Australian banks are now stable, but the banking sector must continue to be watchful to avoid a confidence crisis that would undermine the sector’s stability.