Following the spread of the Silicon Valley Bank (SVB) crisis, Australia’s prudential regulator has reportedly requested local banks to record cryptocurrency transactions.
The Australian Financial Review reported on March 21 that the Australian Prudential Regulatory Authority (APRA) has begun demanding banks to identify their exposures to startups and crypto-related enterprises.
The regulator has asked banks to strengthen their reporting on crypto assets and send daily updates to the APRA, according to a report quoting three individuals with knowledge of the situation.
According to insiders, the agency intends to collect additional information and understanding regarding banking exposures to cryptocurrencies and associated dangers.
According to reports, the new regulations are part of the APRA’s heightened oversight of the banking sector in the wake of recent significant breakdowns in the global financial system.
The UBS Group agreed on March 19 to acquire its failing competitor Credit Suisse for $3.2 billion following Credit Suisse’s weekend collapse. The acquisition was one of the most recent failures in the banking industry, following SVB and Silvergate.
Barrenjoey analyst Jonathan Mott reportedly told clients in a note that the position for Australian banks “remains steady” but cautioned that trust might be quickly shaken, putting pressure on bank margins.
“Our channel checks suggest that deposits are not being removed from institutions of any size,” Mott stated, adding:
“But this is a crisis of confidence and credit spreads and cost of capital will continue to rise. At a minimum, this will add to the margin pressure the banks are facing, while credit quality will continue to deteriorate.”
The announcement was made shortly after the Australian Bankers Association initiated a cost of living inquiry to examine the effects of the COVID-19 pandemic and geopolitical concerns on Australians. An analysis of rising inflation suggested that more than 186 U.S. banks are at risk of a comparable shutdown if depositors opt to withdraw all funds.
