1.

A common understanding on the features and risk characteristics of crypto-assets that should be taken into consideration when designing prudential treatment for banks’ exposures to crypto-assets; and

2.

General principles that should guide the design of prudential treatment by banks to their crypto-assets exposures.

1.

Basel Committee: Definition of “crypto-asset” includes where the following features can be identified–digital/virtual nature, reliance on cryptography and use of distributed ledger technology.

GFMA’s response: there is no wide-spread agreement on the definition of “crypto-assets”, but the GFMA identified types of crypto-assets in its proposed approach to classification and understanding of crypto-assets in Annex A of the response paper.

2.

Basel Committee: General principle of prudential treatment: “Same risk, same activity, same treatment”

GFMA’s response: Highly supportive of the above risk-based principle, but did not encourage an overly simplistic framework. GFMA thinks although there are unique risks associated with high risk crypto-assets, banks can leverage existing frameworks to tackle these risks, as seen in their proposed framework in Annex B of the response paper.

3.

Basel Committee: Channels of bank exposures to crypto-assets and framework for identifying corresponding risk and prudential treatment:

GFMA: the GFMA has made a list of potential channels of bank exposures to crypto-assets, with the corresponding assessment of whether the exposure is direct or indirect, overall risks related to banks’ exposure to the activity for determining the prudential treatment and recommended prudential treatment should banks engage in activity with “high risk” crypto-assets (see Annex B to the response paper).