George Kiladze

Fantastic cryptos and where (not) to find them: prudential rules for the digital age

Since their main-stream inception with Bitcoin in 2009, cryptocurrencies have evolved dramatically, emerging as a transformative asset class distinct from traditional flat currencies. Cryptocurrencies and distributed ledger technology have introduced significant efficiencies, such as greater transactional transparency, faster settlement processes and increased financial accessibility. As a result, the market has grown exponentially, achieving a market capitalisation f approximately US$3.93trn (as at 22 July 2025), signifying deepening integration within the global financial system.

Notwithstanding the successes, a string of scandals, including the collapse of crypto ventures such as Celsius, BlockFi and Terra and the implosion of FTX, has brought renewed focus on the volatility and liquidity of such instruments and their systemic impact. In response to the rapid evolution and integration of cryptocurrencies, the Basel Committee developed a detailed prudential framework designed to manage the associated risks effectively. This article examines these developments and their implications for banks globally, and addresses whether the rigid classification into Group 1 and Group 2 cryptoassets strikes an appropriate balance between prudential conservatism and enabling banks to engage competitively within this evolving market.

Significant Risk Transfer’s impact on the output floor under Basel III: the EU’s proposed panacea unveiled

The European Banking Authority, in its Basel III full implementation impact report¹1 found that European banks’ Tier 1 capital requirements would increase by 15% as a 1result of Basel III changes, with the proposals for an output floor being responsible for a 7.1% overall rise. In this article, the authors consider how significant risk transfer (SRT) transactions can be used to decrease a bank’s risk weighted assets (RWAs) in order to minimise their capital burden in light of increased capital requirements as a result of the output floor. Other capital requirements specific to securitisations are also considered.1 1