Crypto-Assets & Blockchain

Description

Blockchain and crypto-assets have entered the scope of banks, insurers and supervisors. This two-day course gives the technical and economic foundations needed to talk with specialist teams, assess an offer or a project, and read the applicable texts. No development skills are required.

Learning objectives

By the end of the course, participants will be able to:

• Explain how a blockchain works: distributed ledger, consensus, keys and signatures
• Tell the main categories of crypto-assets apart: payment tokens, stablecoins, utility tokens, financial tokens
• Identify the players of the ecosystem: miners and validators, exchanges, custodians, issuers
• Place the use cases relevant to banking and finance, and their limits
• Spot the main risks and the applicable regulatory framework

Teaching methods and resources

Presentations illustrated with real examples, demonstrations on a public blockchain explorer, token classification workshops, case studies of financial institutions’ projects. A reference glossary is provided. Experience sharing between participants.

Course programme

1. Technical foundations

• Distributed ledger, blocks and cryptographic chaining
• Consensus mechanisms and transaction finality
• Public keys, private keys and wallets
• Public, private and permissioned chains

Practical work: guided reading of a transaction on a public explorer.

2. Typology of crypto-assets

• First-generation cryptocurrencies and payment tokens
• Stablecoins: backing and stability mechanisms
• Utility tokens and tokens representing financial rights
• Non-fungible tokens and their uses

Practical work: classifying a sample of tokens using a common grid.

3. The ecosystem and its players

• Centralised and decentralised exchanges
• Custody, brokerage and related services
• Issuers, infrastructure providers and on-chain data analysts
• Interactions with banks: accounts, payments, financing

Practical work: mapping the players in a journey from purchase to custody.

4. Uses, risks and applicable framework

• Use cases: payment, asset tokenisation, settlement
• Market, custody, compliance and reputational risks
• Overview of the European and international framework
• Questions to ask before opening an activity or a partnership

Practical work: analysing a fictional tokenisation project and listing the points of vigilance.

Description

The European Markets in Crypto-Assets Regulation (MiCA) sets rules for the issuance of certain tokens and for service providers. This three-day course presents the structure of the text, the regimes by token category, the obligations of issuers and providers, and the link with other European texts. Participants learn to qualify a token and draw the operational consequences.

Learning objectives

By the end of the course, participants will be able to:

• Qualify a crypto-asset under MiCA and the other applicable regimes
• Distinguish the regimes for e-money tokens, asset-referenced tokens and other crypto-assets
• Describe the disclosure, governance and conduct obligations of issuers and providers
• Place the role of national and European authorities in authorisation and supervision
• Link MiCA with financial markets rules, payment services rules and AML/CFT
• Identify the points of vigilance in a compliance programme

Teaching methods and resources

Regulatory input illustrated by anonymised cases. Token qualification workshops, annotated reading of the texts, issuance and service case studies. A qualification grid and a compliance checklist are provided.

Course programme

1. Architecture and scope of the regulation

• Objectives, application timeline and structure of the text
• Definitions: crypto-asset, issuer, service provider
• Exclusions and interaction with existing texts
• Role of the EBA, ESMA and national authorities

Practical work: qualifying a token with a decision tree.

2. Regimes by token category

• E-money tokens: conditions of issuance
• Asset-referenced tokens: reserve, governance, disclosure
• Other crypto-assets: white paper and marketing communications
• Public offers and admission to trading

Practical work: critical review of a fictional white paper.

3. Crypto-asset service providers

• Authorisation and organisational requirements
• Custody and order execution
• Trading platforms and operating rules
• Advice on crypto-assets and portfolio management

Practical work: mapping the requirements for a fictional provider.

4. Conduct, market abuse and client protection

• Conduct obligations: conflicts of interest, complaints handling
• Preventing market abuse in crypto-assets
• Disclosure and protection of holders
• Sanctions and supervisory measures

Practical work: analysing cases of behaviour that could be qualified as abuse.

5. Link with other frameworks and implementation

• Links with MiFID II, payment services, DORA and AML/CFT
• Governance and management responsibilities
• Step-by-step compliance plan
• Expected developments in the framework

Practical work: building a compliance action plan.

Description

Obtaining an authorisation is not enough: a crypto-asset service provider must run a working governance, control and conduct framework. This two-day course focuses on the operational organisation of compliance, leaving aside anti-money laundering, which is covered elsewhere. It draws on practical cases of set-up and control.

Learning objectives

By the end of the course, participants will be able to:

• Build a compliance plan suited to the provider’s activity and size
• Organise the three lines of defence and the role of management
• Set up conflicts-of-interest prevention and complaints handling
• Frame marketing communications and client information
• Define ongoing and periodic controls and the monitoring indicators

Teaching methods and resources

Framework design workshops, case studies, procedure review exercises, control role-plays. A control plan template and a conflicts-of-interest register template are provided. Experience sharing.

Course programme

1. Governance and organisation

• Role of the management body and individual responsibilities
• Control functions: compliance, risk, internal audit
• Policies and procedures to formalise
• Outsourcing and dependence on technical providers

Practical work: mapping the responsibilities and policies of a fictional provider.

2. Conflicts of interest and conduct

• Types of conflicts specific to crypto-asset activities
• Register, prevention and mitigation measures
• Best execution and fair handling of orders
• Remuneration and incentives

Practical work: drafting a conflicts-of-interest register.

3. Clients, information and complaints

• Pre-contractual information and marketing communications
• Know-your-client and suitability of services
• Complaints handling and monitoring
• Record keeping

Practical work: critical review of a marketing communication.

4. Control plan and reporting

• Ongoing and periodic controls
• Compliance indicators and alert thresholds
• Relations with supervisors
• Continuous improvement plan

Practical work: building an annual control plan and its dashboard.

Description

Crypto-assets combine familiar risks with new ones: extreme volatility, fragmented liquidity, dependence on technical infrastructure, concentration of players. This three-day course offers a complete risk map and, for each risk, proven management methods: limits, collateral, stress scenarios, continuity plans. It is aimed at professionals who must decide, control or report.

Learning objectives

By the end of the course, participants will be able to:

• Map all the risks linked to an exposure or an activity in crypto-assets
• Measure market and volatility risk and set suitable limits
• Assess credit and counterparty risk on platforms and crypto-backed loans
• Appraise liquidity risk and its effects in periods of stress
• Include operational, technological and custody risk
• Build a governance, limits and reporting framework

Teaching methods and resources

Presentations illustrated by real market episodes, risk-mapping workshops, volatility and limit calculation exercises on public data, crisis simulation. A risk matrix and a dashboard template are provided. Experience sharing.

Course programme

1. Risk mapping

• Market, credit, liquidity, operational, legal and reputational risks
• Risks specific to crypto-assets: protocol, smart contract, network governance
• Sources of incidents and lessons from platform failures
• Risk appetite and governance

Practical work: building a risk matrix for a custody and exchange activity.

2. Market and volatility risk

• Statistical features of crypto-asset returns
• Risk measures: volatility, value at risk, expected shortfall and their limits
• Position, concentration and loss limits
• Hedging and derivatives on crypto-assets

Practical work: calculating volatility and value at risk on public historical data.

3. Credit, counterparty and liquidity risk

• Counterparty risk on platforms, custodians and stablecoin issuers
• Crypto-backed lending: haircuts, margin calls, liquidation
• Market liquidity and funding liquidity
• Contagion between players

Practical work: analysing a crypto-backed financing file and setting haircuts.

4. Operational and technology risk

• Failures of custody, key management and protocols
• Risk linked to providers and technical dependence
• Continuity and recovery plans
• Incident mapping and key risk indicators

Practical work: scenario of a custodian outage and response plan.

5. Governance, stress testing and reporting

• Committees, delegations and limits
• Stress scenarios: price shock, platform failure, loss of confidence in a stablecoin
• Indicators and dashboard for management
• Interactions with the supervisor

Practical work: building a risk dashboard and a stress scenario.

Description

The Basel Committee has defined a prudential treatment for banks’ crypto-asset exposures, which is being transposed and reviewed. This two-day course presents the logic of the classification, the resulting capital and liquidity requirements, the disclosure obligations and the state of European transposition. It lets teams measure the impact on their institution.

Learning objectives

By the end of the course, participants will be able to:

• Explain the classification logic adopted by the Basel Committee
• Describe the capital treatment by asset category
• Place the liquidity, large exposure and disclosure requirements
• Identify the conditions for recognising tokenised assets and stablecoins
• Assess the state of European transposition and transitional provisions
• Estimate the impact on ratios and organise the monitoring of changes to the framework

Teaching methods and resources

Annotated reading of the standards and transposition texts, classification and calculation exercises on simplified cases, impact analysis workshops. A classification grid and an impact note template are provided. Experience sharing.

Course programme

1. Why and how the Basel Committee treats crypto-assets

• Context: risks to financial stability and to banks
• Timeline of the standard and targeted reviews under way
• Role of national and European supervisors
• Basic principles: prudence, technology neutrality

Practical work: identifying recent changes to the framework from official publications.

2. Classification and recognition conditions

• Asset groups: tokenised assets, stablecoins, other crypto-assets
• Classification tests and the role of supervisors
• Requirements on issuers and underlying infrastructure
• Assets excluded from the favourable treatment

Practical work: classifying a set of asset cases using the grid.

3. Capital and large exposures

• Risk weights and requirements by category
• Exposure limits for the least recognised assets
• Treatment of long and short positions
• Large exposures and concentration

Practical work: calculating capital requirements on a simplified portfolio.

4. Liquidity, disclosure and European transposition

• Treatment in liquidity ratios
• Information to publish under Pillar 3
• European transitional provisions and implementing texts
• Monitoring changes to the framework

Practical work: summary impact note for the risk committee.

Description

In the world of digital assets, whoever controls the keys controls the assets: security and custody therefore sit at the heart of the risk. This two-day course presents custody models, key management practices, the threats specific to the ecosystem and the organisational measures to implement. It links the framework to the resilience requirements that apply to financial entities.

Learning objectives

By the end of the course, participants will be able to:

• Compare custody models: third-party custody, self-custody, hybrid solutions
• Describe good key management practices and segregation of duties
• Identify threats specific to digital assets: phishing, infrastructure compromise, smart contract vulnerabilities
• Define the security controls, tests and monitoring to put in place
• Organise detection, response and communication in the event of an incident
• Link the framework to digital operational resilience requirements

Teaching methods and resources

Presentations illustrated by real incidents, custody model comparison workshops, crisis management exercises, security policy reviews. A custodian review checklist and an incident response plan template are provided. Experience sharing.

Course programme

1. Custody models

• Keys, hot, cold and multi-signature wallets
• Delegated custody and segregation of assets
• Proofs of reserves and of existence of assets
• Requirements applicable to custodians

Practical work: comparing three custody models against risk criteria.

2. Key management and access controls

• Key generation, backup and destruction
• Segregation of duties, dual control and delegations
• Hardware security modules and authorisation procedures
• Management of leavers and privileged access

Practical work: critical review of a transaction-signing procedure.

3. Threats and vulnerabilities

• Phishing and social engineering
• Infrastructure and supply chain compromise
• Smart contract and cross-chain bridge vulnerabilities
• Lessons from the main public incidents

Practical work: analysing public incident cases and the controls that could have prevented them.

4. Incidents, resilience and governance

• Detection, qualification and incident management
• Continuity, recovery and resilience testing
• ICT provider management and the link with DORA
• Communication to clients, authorities and the market

Practical work: simulating a compromise incident and writing the response plan.

Description

Stablecoins, decentralised finance (DeFi) and central bank digital currency projects are redrawing the boundaries between payments, banking and markets. This two-day course presents their mechanisms, uses and risks, along with the response of the authorities. It helps decision-makers assess their institution’s opportunities and exposures.

Learning objectives

By the end of the course, participants will be able to:

• Explain the stability mechanisms of the different types of stablecoin and their vulnerabilities
• Describe how decentralised finance protocols work: exchange, lending, derivatives
• Identify DeFi-specific risks: smart contracts, governance, liquidity, interdependencies
• Place central bank digital currency projects and their implications for banks
• Assess financial stability issues and the authorities’ responses
• Define an institutional position: monitoring, experimentation, exposure

Teaching methods and resources

Presentations, case studies of loss-of-stability episodes, read-only demonstrations on public protocols, opportunity and risk assessment workshops. A stablecoin and protocol analysis grid is provided. Experience sharing.

Course programme

1. Stablecoins

• Reserve backing, crypto-asset backing, algorithmic mechanisms
• Quality and composition of reserves, redemption and holders’ rights
• Loss-of-stability episodes and lessons
• Uses: payment, settlement, dollar savings

Practical work: comparative analysis of three stablecoins by reserve composition and redemption conditions.

2. Decentralised finance

• Principles: smart contracts, pooled liquidity, token governance
• Decentralised exchanges, over-collateralised loans, derivatives
• Smart contract, oracle and governance risks
• Compliance and identification of participants in DeFi

Practical work: reading a lending protocol and identifying its risks.

3. Central bank digital currencies

• Objectives, architectures and distribution models
• Current projects, including the digital euro
• Possible effects on bank deposits and payments
• Role of intermediaries and privacy issues

Practical work: scenarios of the impact of a central bank digital currency on a retail bank’s model.

4. Financial stability and institutional positioning

• Interdependencies between crypto-assets, banks and markets
• Responses of authorities and international bodies
• Monitoring, experimentation and positioning
• Institutional action plan

Practical work: drawing up a monitoring and experimentation roadmap.