FINMA: Crypto trading should be treated as high risk

Tuesday 6 November 2018 09:55 CET | News

Switzerland\s Financial Market Supervisory Authority (FINMA) has released some guidance for banks wanting to trade in crypto assets.

FINMA said it advises banks and securities dealers to assign a ‘flat risk weight of 800% to cover market and credit risks’ against crypto assets, according to CoinDesk. That means, for instance, if the current price of Bitcoin is USD 6,000, institutions would have to value each coin on their books at USD 48,000 when deciding on an adequate level of buffer.

The guidance is on the high end of the range and on the level of hedge funds, meaning FINMA considers crypto assets to be volatile. reports that FINMA has also set a crypto-trading cap at 4% of a banks total capital, and said they must report to the authority if they reach that upper limit.

Still, the regulator hasnt yet released official rules for how Swiss banks should deal with cryptocurrencies under the Basel III international banking regulations. Back in February 2018, FINMA did issue official guidance for initial coin offerings (ICOS) after receiving a large number of enquiries on the issue.

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Keywords: Financial Market Supervisory Authority, FINMA, cryptocurrency, crypto trading, banks, digital assets, Switzerland
Countries: World