Russia proposes 1% crypto capital cap for banks

The Bank of Russia published a draft regulation on Sept. 18, 2026 proposing a 1% capital cap on banks’ crypto and crypto-linked exposures. The draft creates two ratios: N31 for individual credit institutions and N32 for banking groups on a consolidated basis. Each ratio compares covered crypto-related exposure with the relevant entity’s capital measure rather than total assets.

The draft sets the ceiling for covered exposures at 1% of the applicable capital measure for both the single-entity and consolidated tests. The numerator covers more than outright coin holdings. It includes direct and indirect investments, derivatives whose value depends on crypto prices, and credit instruments such as loans, bonds, guarantees, repos and credit lines when their settlement or value depends on crypto or other foreign digital instruments.

Hedging recognition is limited. Long and short positions may be netted only within a qualifying lower-risk category and only when specific conditions are met for the asset, settlement and maturity, as well as freezing and liquidity risk. Direct holdings and other higher-risk exposures cannot be fully offset by opposite positions and are measured more conservatively.

The draft distinguishes client custody positions based on liability for seizure or transaction restrictions. A custody position is included in N31 or N32 when the bank, or a digital depository in its group, is liable for losses from seizure or restricted transactions. If the bank does not bear that liability, the client custody position is excluded from the two 1% ratios.

Excluded client custody positions remain subject to capital rules. For capital-adequacy calculations the draft assigns a 50% risk weight to custody positions for which the bank is not liable. Own-account exposures and client positions for which the bank is liable would receive a 1,250% risk weight.

The draft aims to allow banks to offer custody services without treating every customer asset as the bank’s own exposure when the specified liability is not assumed, while placing a capital-based limit on direct holdings and other crypto-linked risks on the bank’s balance sheet.

The proposed regulations remain in draft form. The central bank plans official publication in the fourth quarter of 2026, with requirements to take effect 10 days after publication. Banks are expected to begin reporting instrument turnover and N31/N32 values in January 2027. Detailed reporting forms and implementation guidance are still being developed. The ratios are part of a broader set of measures the central bank is preparing to regulate crypto activity in the banking sector.