Virtual assets in non-bank financial institutions: A conceptual prudential compatibility index

Abstract

Type of the article: Theoretical ArticleAbstractVirtual assets are integrated into financial markets, but legal recognition and tradability do not determine whether an instrument can support regulated liabilities in non-bank financial institutions (NBFIs). This theoretical study develops the Conceptual Prudential Compatibility Index (CPCI) as an ordinal framework for prudential screening. It combines peer-reviewed research with primary-source analysis of the European Union, the United States, and Ukraine, using a regulatory cut-off date of August 4, 2026. To avoid unsupported precision, the CPCI does not assign scalar scores. It separates a core economic-prudential profile – liquidity, value stability, and predictability/valuation reliability – from a non-compensatory regulatory overlay, R(a, j, s, u), defined by instrument, jurisdiction, NBFI sector, and intended prudential use. Each dimension is classified through fixed documentary anchors as high, moderate, limited, very low, or insufficient evidence. Traditional reference archetypes show stronger core profiles than large-cap unbacked crypto-assets, with stress-sensitive liquidity and very low value stability and predictability. Fiat-backed stablecoins require separate assessment of redemption rights, reserve quality, and segregation. Tokenized securities and real-world claims require look-through assessment of the underlying asset and legal, custody, and operational risks. The regulatory comparison confirms that market regulation does not create reserve eligibility: MiCA is distinct from Solvency II and IORP rules; U.S. insurance accounting treats directly held crypto-assets as non-admitted under the cited NAIC guidance; and reviewed Ukrainian sectoral rules do not expressly identify virtual assets as eligible prudential assets. The CPCI is a documentary screening framework, not an externally validated quantitative risk model.