SVB contagion: Australia reportedly asks banks to report on crypto

SVB contagion: Australia reportedly asks banks to report on crypto


Australia’s prudential regulator has reportedly asked local banks to report cryptocurrency transactions amid continued contagion from the Silicon Valley Bank (SVB) collapse.

The Australian Prudential Regulation Authority (APRA) has begun requiring banks to declare their exposures to crypto-related startups and companies, Australian Financial Review reported on March 21.

The regulator ordered banks to improve their reporting on crypto assets and provide daily updates to APRA, the report noted, citing three people familiar with the matter. The agency aims to gain more information and insights into bank exposures to cryptocurrencies, as well as the associated risks, the sources said.

The new measures are reportedly part of APRA’s increased supervision of the banking sector following recent massive collapses of the global banking system. On March 19, UBS Group agreed buy out ailing competitor Credit Suisse for $3.2 billion after the latter collapsed over the weekend. The acquisition became one of the latest failures in the banking industry after the collapses of SVB and Silvergate.

Barrenjoey analyst Jonathan Mott reportedly told clients in a note that the situation “remains stable” for Australian banks, but warned that confidence could be hit quickly, putting pressure on bank margins.

Related: Silvergate and SBV Collapse Is “Definitely Good” for Bitcoin, Trezor Exec Says

“Our channel checks indicate that deposits are not being withdrawn from smaller institutions of any size, and capital and liquidity buffers are strong,” Mott said, adding:

“But this is a confidence crisis and credit spreads and the cost of capital will continue to rise. At the very least, this will increase the margin pressure banks face, while credit quality will continue to deteriorate.”

The news comes shortly after the Australian Banking Association launched an investigation into the cost of living to study the impact of the COVID-19 pandemic and geopolitical tensions on Australians. The research followed an analysis of rising inflation that suggests more than 186 banks in the United States are at risk of a similar closing if depositors decide to withdraw all funds.