Russia caps bank crypto at one per cent

Three weeks after letting its banks into crypto, Russia has published the terms, and the terms are the policy.

The Bank of Russia's draft regulation would cap a credit institution's total exposure to cryptocurrencies and foreign digital instruments at 1% of its own capital, crypto.news reports, through two new ratios: N31 for individual banks and N32 for banking groups on a consolidated basis.

The definition of exposure is drawn widely, which is where these rules do their work. It covers direct holdings, loans and credit lines tied to crypto, derivatives and bonds whose payments depend on it, repo transactions and guarantees. There is no obvious structure that gets a bank around the limit by changing the wrapper.

The capital treatment makes the cap almost redundant. Aggregate crypto exposure would carry a 1,250% risk weight, the international convention for an asset a supervisor wants funded entirely by equity: hold one rouble of it and set aside a rouble of capital.

There is a gradation inside that, and it rewards the transactions supervisors can see. Exchange-traded derivatives and qualifying over-the-counter positions with approved counterparties sit in a group where opposing long and short positions can be netted. Direct holdings and crypto-settled loans sit in a group where they cannot.

Compliance is continuous rather than quarterly. Banks would have to meet the ratios every operating day, and six breaches in any thirty operating days would trigger enforcement. Reporting begins in January 2027, with the regulation expected in the final quarter of this year.

Put beside the retail regime that began on 1 September, the design becomes legible. Ordinary investors may buy up to 300,000 roubles of eligible crypto a year and qualified investors face no ceiling, while the banks that would otherwise intermediate all of it are held to one per cent of capital.

That is a deliberate separation of risk from the payment system. Households may take the exposure; the institutions whose failure would be the state's problem may barely touch it. It is the same instinct behind the Basel treatment of crypto assets, executed with less ambiguity.

It is also consistent with what other supervisors did this month. Canada confirmed that a tokenised deposit is a deposit, and Brazil shut stablecoins out of bulk currency settlement. Each answer differs; the shared principle is that the regulated core is where the line gets drawn.

The practical effect for Russian banks is that crypto becomes a client service rather than a balance-sheet business. Custody, execution and structured exposure where the bank does not carry the loss remain available. Anything that requires the bank to own the asset has been priced out.