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The world’s largest standard-setter of banking regulation has proposed a tough new rule that would require banks to essentially set aside a dollar of reserves for every dollar of bitcoin they own.
The Basel Committee for Banking Supervision, a group of central bankers and global regulators, announced the plan on Thursday during a public consultation on how it intends to treat cryptocurrency assets, which it says raised concerns about consumer protection, money laundering and terrorist financing.
Interest in cryptocurrencies from major corporations and financial firms has increased this year.
The committee, which includes the Federal Reserve, the European Central Bank and other major central banks, does not enforce the rules itself but sets minimum standards that regulators around the world agree to and enforce locally.
The committee said banks should apply a 1,250% risk weight to bitcoin, which is in effect similar to the deduction of assets from capital. If a bank had $ 100 exposure to bitcoin, that would result in risk-weighted assets of $ 1,250, which, multiplied by the minimum capital requirement of 8%, would result in the setting aside of at least $ 1,250. minus $ 100, the committee said in its statement.
The committee proposed less stringent capital requirements for crypto assets that met certain conditions, such as traditional tokenized assets and stablecoins. These types of crypto assets are often pegged to the value of a traditional currency such as the US dollar, and therefore are theoretically less volatile. These are eligible for treatment under existing Basel rules, while bitcoin would be subject to the new conservative prudential treatment.
Banks have until September 10 to respond to committee proposals. Central bank digital currencies are not included in the consultation.
An extended version of this story appears on WSJ.com.
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