The Basel Committee, the global banking standards organization, has finalized its rules on banking exposure to cryptocurrency assets. The document outlines two categories of crypto assets, tokenized real assets (and stablecoins) and other cryptocurrencies, as well as the limits on the amount and collateral that banks can hold for each.
Basel Committee Publishes Guidelines For Crypto Exposure
As banks are increasingly offering cryptocurrency services, standards organizations are defining how traditional financial institutions can deal with digital assets. The Basel Committee has issued the final rules on banking exposure to cryptocurrencies.
The first group is composed of tokenized assets and stablecoins, while the second contains other types of digital assets.
The new directives, announced December 16 by the institution, set the maximum amount of crypto that banks can hold. The suggestion is to keep it at 1% of their total Tier 1 capital, which is the sum of all primary assets such as shares and reserves. However, the Basel Committee allows banks to maintain up to 2% of the cryptocurrency they desire.
Stablecoins, which are part of the first category, must comply with stringent guidelines in order to be accepted as collateral.
Framework Development
The third consultation between the members of the group produced the new set of guidelines following criticism of some of its decisions in the second iteration. June 30. For example, the latest version of the document covers cryptocurrency assets and establishes a 100 percent principal charge, which was not mentioned in the previous version.
Pablo Hernández de Cos, President of the Basel Committee Governor of the Bank of Spain, commented on the importance of this cryptographic framework:
The Basel Committee’s work is another example of our willingness, ability, and commitment to work in a globally coordinated way to mitigate emerging threats to financial stability, such as the standard on crypto assets.
In October, the Basel Committee reported that global banks were exposed to $9 billion worth of cryptocurrency assets.
The rules regarding cryptocurrencies will come into effect January 1, 2025, and may be modified as the committee evaluates the behavior of crypto assets with banks.
What do you think of the latest set of cryptocurrency regulations published by the Basel Committee? Let us know your thoughts in the comments section below.
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