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Australian banks have been asked to disclose their crypto and start-up business exposure.
The Australian Prudential Regulation Authority (APRA) made the announcement on Tuesday, in response to the collapse of Silicon Valley Bank (SVB).
Banks were asked to provide daily updates on their crypto and start-up assets to reveal any vulnerabilities and to "improve their reporting around crypto assets," according to finacial news outlet AFR.
APRA is an independent body but is accountable to the Australian Parliament. Its focus is on maintaining safety in the financial industry, protecting depositors and other stakeholders.
Peter Cook, chief executive of ASX-listed payments services company Novatti, said the recent fallout has questioned productivity gains driven by financial innovation.
“The growth of digital economy businesses is at risk if start-ups can’t get banking services and all of the growth and subsequent efficiencies, productivity and job growth that go alongside that,” Cook said.
Barrenjoey analyst Jonathan Mott told clients in a note that the “situation remains stable” for Australian banks. However, Mott also warned that confidence may dwindle.
“Our channel checks indicate deposits are not being withdrawn from smaller institutions in any size, and capital and liquidity buffers are strong,” Mr Mott said.
“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.”
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Last Friday, the Council of Financial Regulators (CFR) – a co-ordinating body for APRA, ASIC, Treasury and the RBA – held its regular quarterly meeting to discuss the effects of SVB's collapse.
“APRA, in consultation with CFR agencies, will continue to closely monitor the situation [with SVB] through its intensive supervision of the Australian banking system, which remains strongly capitalised and highly liquid,” CFR said in a statement.
Countries around the world have been responding to turmoil plaguing the crypto and financial markets. Just this week, Taiwan announced it is looking to adopt special legislation following the fallout of FTX.
During a hearing about global banking stability, Huang Tien-mu announced on Monday that Taiwan's Financial Supervisory Commission (FSC) will be the regulator of the region's crypto industry. Taiwan follows the likes of Dubai and Hong Kong, which strengthened its crypto regulatory stance in 2023.
Last month, Dubai released licensing and authorization requirements for virtual asset companies and issuers looking to operate in the emirate.
VARA said the regulations aim to "position Dubai as a regional and international hub for Virtual Assets and related services and to develop a digital economy in the city to boost its competitive edge locally and internationally."
Meanwhile, the Hong Kong Securities and Futures Commission (SFC) said last month that retail investors will be able to access the two largest crypto tokens, Bitcoin and Ethereum.
However, retail customers are required to pass a knowledge assessment or else only be offered access after training is provided. The SFC also requires all digital asset trading platforms operating in Hong Kong or actively marketing to Hong Kong-based investors to obtain a license from the SFC.
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