Russia Sets 1% Crypto Capital Cap for Banks
The Bank of Russia proposes a strict 1% limit on covered crypto exposure relative to bank capital. This measure aims to isolate customer assets while capping institutional risk.
The Bank of Russia has proposed a 1% capital cap for bank-held crypto assets. This limit applies to both individual institutions and consolidated banking groups. The proposal distinguishes between direct holdings and customer custody positions.
Client custody remains outside the 1% calculation if the bank does not bear liability for seizure or restriction losses. This structure allows banks to hold customer assets without treating them as their own risk exposure. The draft rules are currently in the review phase.
Two-Level Ratio Structure
The proposal introduces two specific ratios labeled N31 and N32. N31 measures the exposure of individual credit institutions against their own funds. N32 applies the same 1% ceiling to banking groups on a consolidated basis.
This dual approach ensures that both the entity carrying the risk and its wider group face the same constraint. The measurement is tied to capital rather than total assets. This prevents large balance sheets from masking high-risk crypto positions.
Risk Weighting for Custody
The draft assigns a 50% risk weight to non-liable client custody positions. In contrast, own-account exposure and liable custody positions receive a 1,250% risk weight. This significant difference reflects the varying degrees of financial responsibility.
Banks can net long and short positions only within a qualifying lower-risk category. This category imposes strict conditions on settlement, maturity, and liquidity. Higher-risk exposures cannot be fully neutralized by offsetting positions.
Implementation Timeline and Scope
The central bank plans to publish the final rules in the fourth quarter of 2026. The requirements will take effect ten days after official publication. Banks must begin reporting instrument turnover and ratio values in January 2027.
The scope covers direct investments, derivatives, and instruments like loans and guarantees. These instruments must depend on crypto or foreign digital instruments for settlement or value. CryptoSlate notes that this framework is part of a broader rulemaking process.
