APRA details its crypto expectations

Banks have received a letter from APRA instructing them on the regulator’s expectations around crypto-assets.

The prudential regulator has issued a letter to regulated firms on how it expects them to manage their dealing with digital assets, including stablecoins and crypto-assets.

In a statement on Thursday, APRA confirmed that it expects all banks and other regulated entities to adopt a “prudent approach” if they’re undertaking activities associated with crypto-assets, and ensure that any risks are well understood and well managed before launching material new initiatives.

Earlier this month, while speaking to the American Chamber of Commerce in Australia, APRA chair Wayne Byres, confirmed that the letter will not introduce new regulatory requirements.

“In the immediate term, we would like to give regulated institutions more clarity on regulatory expectations,” Mr Byres said.

“Much like our approach to climate risk, its underlying message is primarily one of: ‘by all means innovate, but proceed with care and in full knowledge of the risks’,” he continued.

What the letter asks of regulated entities is that they conduct “appropriate” due diligence and a “comprehensive” risk assessment before engaging in activities associated with crypto-assets.

They’re also asked to apply robust risk management controls, with clear accountabilities and relevant reporting to the board on the key risks associated with new ventures.

“Entities also need to ensure they comply with all conduct and disclosure regulation administered by ASIC. This will require robust conduct risk management and consideration of distribution practices and product design, as well as consideration of disclosure,” the letter reads.

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Source: APRA details its crypto expectations | nestegg