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Basel Committee Proposes Banks to Separate Regulation of Crypto Assets Based on Risk – Regulation Bitcoin News


The Basel Committee on Banking Supervision has proposed splitting crypto assets into two groups and asking banks to regulate them based on their market, liquidity, credit and operational risks. Cryptocurrencies, such as bitcoin, will be subject to “a new conservative prudential treatment.”

Crypto regulation proposed by the Basel Committee on Banking Supervision

The Basel Committee has proposed to banks to regulate crypto assets based on their risks. Bank of International Settlement (BIS) published committee public consultation on “Preliminary Proposals for Prudential Treatment of Banks’ Cryptocurrency Exposures” on Thursday.

The BIS noted that banks’ exposure to cryptocurrencies is currently limited. However, it was added:

Continued growth and innovation in crypto assets and related services, along with increased interest from some banks, could raise global financial stability concerns and risks to the banking system in the absence of a specific prudential treatment.

The Basel Committee on Banking Supervision (BCBS) is the primary global benchmark for prudential regulation of banks. Its 45 members include central banks and bank supervisors from 28 jurisdictions. The Secretariat of the Committee is located at the BIS in Basel, Switzerland.

The committee’s “proposals differentiate between crypto assets based on market, liquidity, credit and operational risks present for banks,” BIS elaborated:

The proposals split crypto assets into two broad groups: eligible for treatment under the current Basel Framework, with some modifications; And others, such as bitcoin, are subject to a new conservative prudential treatment.

The first group includes “certain tokenized traditional assets and stable currencies”, the BIS clarified, adding that crypto assets to the second group “create additional and higher risks.”

Submissions on proposals must be made by 10 September. However, BIS said that due to the rapidly evolving and complex nature of this asset class, more than one consultation is required. The BIS further said that central bank digital currencies (CBDCs) are not under the purview of advisory.

What do you think about the proposals of the Basel Committee? Let us know in the comments section below.

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