Basel Committee Finalizes Rules for Banks’ Exposure to Cryptocurrency Assets – Regulation Bitcoin News

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The Basel Committee, the organization responsible for setting global banking standards, has finalized its new rules relating to banks and exposure to cryptocurrencies. The document establishes two different crypto asset classes, including tokenized real assets and stablecoins in one, and other cryptocurrencies in another, distinguishing between collateral and how much banks could hold for each.

Basel Committee sets final rules for crypto exposure

As banks have entered the realm of cryptocurrency services, standards bodies are now defining the means by which traditional financial institutions will be able to hold crypto. The Basel Committee, which is the standards organization for banks globally, has finalized the rules that will define the requirements for banks to be allowed to have exposure to cryptocurrency, dividing assets into two groups different.

The first group includes stablecoins and tokenized assets, while the second includes other cryptocurrencies.

Among the new guidelines announced on December 16 by the institution is the establishment of the maximum amount of crypto that banks can have. It is recommended that this be 1% of their Tier 1 capital, which includes the core assets of these institutions such as reserves and shares. However, the Basel Committee sets the maximum amount of crypto that banks can hold at 2%.

Stablecoins, which are part of the first group, must comply with strict rules to be considered as such, and cannot be received as collateral.

Framework evolution

This new set of rules is the result of the third consultation among the members of the group, after receiving strong criticism for some of the decisions adopted under the second iteration of this set of rules, which was published on June 30. For example, the most recent version of the document includes hedging of cryptocurrency assets and sets a 100% capital charge for it, whereas in the previous version there was no mention of this.

Commenting on the importance of this cryptographic framework, Pablo Hernandez de Cos, Chairman of the Basel Committee and Governor of the Bank of Spain, said:

The Committee’s Standard on Crypto-Assets is another example of our commitment, willingness and ability to act in a globally coordinated manner to mitigate emerging risks to financial stability.

In October, the Basel Committee determined that banks around the world were exposed to $9 billion in cryptocurrency assets.

Rules related to cryptocurrency will begin to be applied on January 1, 2025 and will be subject to further changes as the committee monitors the behavior of the crypto situation with banks.

What do you think of the new set of cryptocurrency rules issued by the Basel Committee? Tell us in the comments section below.

Sergio Goschenko

Sergio is a cryptocurrency journalist based in Venezuela. He describes himself as late in the game, entering the cryptosphere when the price spike happened in December 2017. Having a background in computer engineering, living in Venezuela and impacted by the cryptocurrency boom at the social, it offers a different point of view. on the success of crypto and how it helps the unbanked and underserved.

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