The Australian Prudential Regulation Authority (APRA) has requested local banks report on their cryptocurrency transactions and disclose their exposures to startups and crypto-related companies.
The regulatory body is seeking to obtain a deeper understanding of potential risks and exposures in the system and, as such, has requested daily updates from banks. The APRA is implementing new measures to tighten banking industry regulations following significant failures in the global financial system.
A recent report noted that Australian banks are well-capitalized and profitable, and there is no sign of deposit flight. However, it raised concerns that the increased oversight and compliance measures relating to startups could result in a sector freeze, potentially impacting consumers’ access to banking services.
Peter Cook, CEO of Novatti, a payment services company, stated that while Australia’s stringent prudential regulations have proven to be effective, the current circumstances have raised doubts about the potential productivity gains resulting from financial innovation.
Cook also emphasized that banking services for startups are critical for the growth of the digital economy, and without them, the associated efficiency, productivity, and job growth would be at risk.
In a note to clients, Jonathan Mott, a Barrenjoey analyst, stated that while the situation for Australian banks is presently stable, he cautioned that confidence could deteriorate rapidly and that there may be pressure on bank margins.
Mott stated:
“Our channel checks indicate deposits are not being withdrawn from smaller institutions in any size, and capital and liquidity buffers are strong.”
This move by APRA comes in the wake of the collapse of two major banking institutions in the United States and the current state of the global market. The regulator wants to ensure that the banks in Australia are taking appropriate risk management measures.
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