The Bank of Russia has proposed a 1% crypto capital cap that would limit covered crypto and foreign-digital-instrument risk to a bank's own funds, while carving out some client custody positions from the calculation based on liability structures.
The September 18 proposal establishes two metrics: N31 for individual credit institutions and N32 for banking groups on a consolidated basis. Each ratio compares covered exposure to the relevant institution's capital rather than total assets. The rules remain in draft form pending official publication planned for the fourth quarter of 2026, with requirements taking effect 10 days later.
What the Cap Covers
The numerator of the 1% ratio includes direct and indirect crypto investments, derivatives tied to crypto prices, and instruments such as loans, bonds, guarantees, repos, and credit lines when their value depends on crypto or foreign digital instruments.
Banks may receive limited recognition for hedges. Long and short positions within a qualifying lower-risk category—subject to conditions tied to the asset, settlement, maturity, and liquidity risk—can be netted. Direct holdings and higher-risk exposures are measured more conservatively and cannot be fully offset by opposing positions.
Customer Custody Treatment
The treatment of customer assets depends on liability allocation. A custody position counts toward N31 or N32 only when the bank, or a digital depository within its group, bears liability for loss if assets are seized or transactions are restricted. If the bank does not bear that responsibility, the customer position is excluded from the two 1% ratios.
Excluded custody positions are not removed from prudential treatment entirely. The draft assigns non-liable customer custody a 50% risk weight in capital-adequacy calculations. Own-account exposure and customer positions for which the bank is liable receive a 1,250% risk weight.
Banks are expected to begin reporting N31 and N32 values in January 2027, though detailed reporting forms are still being developed.
