The Bank of Russia has proposed capping banks’ total risk from cryptocurrencies and foreign digital instruments at 1% of their capital as it sets prudential limits for lenders entering the country’s newly regulated crypto market.
Summary
- Bank of Russia has proposed limiting banks’ total risk from cryptocurrencies and foreign digital instruments to 1% of their capital.
- The proposed rules cover direct crypto holdings, derivatives and other linked instruments, while allowing certain lower risk positions to be offset.
- Crypto exposure and certain client positions would carry a 1,250% risk weight, while some excluded client positions would receive a 50% risk weight.
- Banks are expected to begin reporting covered turnover and the new N31 and N32 risk ratios from January 2027.
According to the Bank of Russia, the draft regulation would introduce two maximum risk ratios, N31 for individual credit institutions and N32 for banking groups on a consolidated basis. Both would be limited to 1% of the institution or group’s own funds.
The rules would cover more than direct cryptocurrency holdings. Loans, derivatives, bonds, repo transactions, guarantees, credit lines and other financial instruments whose payments or value depend on cryptocurrencies or foreign digital instruments can fall within the calculation.
Banks would have to remain within the 1% ceiling on every operating day, while a breach on any such day would count as noncompliance. The draft gives the central bank authority to take measures 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 proposed framework divides crypto related transactions into two groups based partly on sanctions and physical liquidity risks, determining how banks can account for long and short positions.
Group 1 includes certain exchange traded cash settled derivatives, qualifying over the counter derivatives and instruments involving counterparties that meet specified credit standards. Some transactions with cryptocurrency miners can qualify under conditions tied to their income from digital asset sales.
Deliverable derivatives and some loans, credit lines, guarantees, repo transactions and bonds can fall into the lower risk group when settlement is available in rubles or currencies of countries Russia does not classify as unfriendly.
For qualifying assets with lower freezing and physical liquidity risks, banks would be permitted to offset opposing long and short positions when calculating exposure. The draft applies discounts when maturities differ, starting at 5% and rising with the gap between the positions. A maturity mismatch of 37 months or more carries an 85% coefficient.
Group 2 captures direct investments in cryptocurrencies and foreign digital instruments, loans settled exclusively with such assets, certain repo transactions and derivatives that do not qualify for Group 1. Other crypto related transactions not included in the first category would fall into Group 2 as well.
The central bank would calculate Group 2 exposure using the larger of a bank’s long or short position in each asset, preventing institutions from fully offsetting the two sides for purposes of the risk limit.
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 certain client positions for which the institution assumes responsibility.
The Bank of Russia said client assets for which a digital depository is responsible for losses arising from seizure or restrictions linked to sanctions risk would be included in the relevant risk calculation. Client positions where the bank does not bear that responsibility would be excluded from the N31 and N32 limits and instead receive a 50% risk weight for capital adequacy purposes.
Cryptocurrencies and foreign digital instruments could not be counted as collateral when banks calculate provisions for possible losses. Derivatives tied to crypto or foreign digital instruments would carry a 36% risk factor under the proposed framework.
The regulator plans to introduce reporting for turnover in the covered instruments and the N31 and N32 ratios from January 2027, with detailed reporting forms still under development. The regulation is expected to be officially published in the fourth quarter of 2026 and would take effect 10 days after publication.
Russia sets bank limits after regulated crypto market opens
The prudential proposal arrives weeks after Russia’s regulated cryptocurrency framework took effect on Sept. 1, bringing trading, custody and cross border crypto transactions under a formal system overseen by the Bank of Russia.
As crypto.news previously reported, nonqualified investors can purchase eligible liquid cryptocurrencies worth up to 300,000 rubles per year through each intermediary after passing a suitability test. Qualified investors can trade without the same purchase ceiling, although testing requirements still apply.
The Bank of Russia had already started preparing operating requirements for the institutions expected to serve the market. Draft rules published in July set out requirements for crypto exchanges and depositories, including registration and capital provisions for companies handling digital assets.
Russian banks have meanwhile been preparing their own infrastructure. Sberbank has set a Dec. 1 target to launch crypto trading infrastructure covering trading, custody, settlement and digital depository services for eligible customers.
Alfa Bank has been testing cryptocurrency trading through its Alfa Investments brokerage application with a limited group of qualified investors. The lender has said a larger rollout depends on the completion of the regulatory framework and has plans to establish its own digital depository.
Regulatory scrutiny has continued alongside the market rollout. On Sept. 15, the Bank of Russia identified cryptocurrencies and stablecoins as a financial market risk, citing concerns that digital assets could be used as substitutes for the ruble and reiterating the possibility of complete investment losses. The regulator’s risk assessment came as Russia continued implementing rules for licensed crypto operators and digital asset custody.