The Basel Committee on Banking Supervision (BCBS) said in a statement emailed on Friday, that it will be implemented globally by 1 January 2025. cryptocurrency approved the banking rules.
Banks’ Cryptocurrency Assets Proposed Not To Exceed Two Percent
A document prepared by the committee, which is the primary global standard-setter for banks’ prospective regulation, recommended that a bank’s exposure to certain crypto-assets should not exceed 2% and generally be less than 1%.
These specific assets are tokenized traditional assets, including non-fungible tokens (NFTs), stablecoins, and unsecured crypto assets that do not meet the classification criteria.
On the other hand, assets in the above list that meet the criteria are “subject to capital requirements posed by key risks, as outlined in the current Basel Framework.”
Earlier, a group of eight traditional finance lobby groups wrote to the committee, arguing that a mere 1% limit for banks could be too restrictive and hinder innovations using blockchain technology. Now, 2% more freedom is provided.
“The step taken today by the GHOS (Group of Central Bank Governors and Supervisors) marks an important milestone in developing a global regulatory base to mitigate risks from cryptoassets to banks,” said Tiff Macklem, chairman of GHOS, the committee’s oversight body.
Regulators have taken a cautious approach to regulating the highly volatile crypto industry lately. Terra, Bitcoin Billions of dollars were wiped out of the crypto market in a year following the collapse of the stock market FTX and related companies and tokens.
The classification conditions set by the committee include ensuring that crypto assets pass a payment risk test and a basic risk test. “Payment risk testing is to ensure that there are sufficient reserve assets to ensure that crypto assets can always be liquidated,” the report said.
The basic risk test, the report said, “aims to ensure that the owner of a crypto-asset can sell that asset in the market for an amount that closely follows the peg value.”
*Not investment advice.
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