The Bank of Russia has proposed capping banks' total risk from cryptocurrencies and foreign digital instruments at 1% of their capital. The draft rules split crypto exposure into two risk groups, apply a 1,250% risk weight to the riskiest holdings, and set reporting requirements starting January 2027.
The Bank of Russia has proposed limiting banks' total risk from cryptocurrencies and foreign digital instruments to 1% of their capital, as lenders begin entering the country's newly regulated crypto market. The draft introduces two maximum risk ratios: N31 for individual credit institutions and N32 for banking groups on a consolidated basis, both capped at 1% of the institution or group's own funds.
These rules extend beyond direct holdings. Loans, derivatives, bonds, repo transactions, guarantees and credit lines whose value depends on cryptocurrencies or foreign digital instruments all fall within the calculation. Banks must stay within the ceiling every operating day, and the central bank can act against an institution if breaches occur on six or more operating days within any 30 consecutive operating days.
Bank of Russia crypto rules separate assets by risk
The framework splits crypto-related transactions into two groups based partly on sanctions and physical liquidity risks. Group 1 covers exchange-traded cash-settled derivatives, qualifying over-the-counter derivatives, and instruments involving counterparties that meet specified credit standards, along with some transactions tied to cryptocurrency miners' income from digital asset sales.
For qualifying Group 1 assets, banks can offset opposing long and short positions, though the draft applies discounts when maturities differ, starting at 5% and rising with the gap between positions, reaching an 85% coefficient at a maturity mismatch of 37 months or more. Group 2 captures direct crypto investments and other transactions that don't qualify for Group 1; the central bank calculates that exposure using the larger of a bank's long or short position in each asset, preventing full offsetting.
Banks face a 1,250% crypto risk weight
Capital treatment under the proposal would impose a 1,250% risk weight on a bank's aggregate crypto exposure and on certain client positions the institution is responsible for. Client positions where the bank doesn't bear that responsibility would instead carry a 50% risk weight for capital adequacy purposes.
Cryptocurrencies and foreign digital instruments could not count as collateral when banks calculate loss provisions, and derivatives tied to crypto would carry a 36% risk factor under the proposal. The regulator plans to introduce reporting for covered turnover and the N31 and N32 ratios from January 2027, with the regulation expected to take effect 10 days after publication in the fourth quarter of 2026.
Rules follow Russia's new regulated crypto market
The proposal arrives weeks after Russia's regulated cryptocurrency framework took effect on Sept. 1, bringing trading, custody and cross-border crypto transactions under Bank of Russia oversight. Nonqualified investors can purchase eligible liquid cryptocurrencies worth up to 300,000 rubles per year through each intermediary after passing a suitability test, while qualified investors face no purchase ceiling but still must pass the test.
Russian banks are meanwhile building their own infrastructure. Sberbank has set a Dec. 1 target to launch crypto trading infrastructure covering trading, custody, settlement and digital depository services, while Alfa Bank has been testing crypto trading through its Alfa Investments brokerage app with a limited group of qualified investors.
Source: crypto.news
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