The new standard limits crypto reserves among banks to 2% by 2025, and goes into effect on January 1, 2025.
A global standard for banks’ exposure to crypto assets has been supported by the group of central bank Governors and Heads of supervision (GHOS) of the Bank for International Settlements (BIS). the quality, that sets a limit of twenty-two on crypto reserves among banks, should be implemented on January. 1, 2025, in step with an official announcement on Dec. 16.
The report, dubbed “Prudential treatment of cryptoasset exposures,” introduces the ultimate standard structure for banks regarding exposure to digital assets, as well as tokenized traditional assets, stablecoins and unbacked cryptocurrencies, as well as feedback from stakeholders collected in a very consultation launched in June. The Basel Committee on Banking supervision noted the report can soon be incorporated as a new chapter into the consolidated Basel Framework.
BIS's announcement highlights that the worldwide banking system's direct exposure to digital assets remains relatively low, however recent developments have outlined "the importance of having a robust minimum framework for internationally active banks to mitigate risks." It additionally stated:
“Unbacked cryptoassets and stablecoins with ineffective stabilisation mechanisms will be subject to a conservative prudential treatment. The standard will provide a robust and prudent global regulatory framework for internationally active banks' exposures to cryptoassets that promotes responsible innovation while preserving financial stability.”
Related: What is a CBDC? Why central banks want to get into digital currencies
Pablo Hernández DE Cos, chair of the Basel Committee and Governor of the Bank of Spain, noted regarding the standard:
“The Committee’s standard on cryptoasset is a further example of our commitment, willingness and ability to act in a globally coordinated way to mitigate emerging financial stability risks. The Committee’s work programme for 2023–24 endorsed by GHOS today seeks to further strengthen the regulation, supervision and practices of banks worldwide. In particular, it focuses on emerging risks, digitalisation, climate-related financial risks and monitoring and implementing Basel III.”
The BIS disclosed in September the results of its multi-jurisdictional central bank digital currency (CBDC) pilot, following a month-long testing phase that enabled cross-border transactions value $22 million. The pilot program concerned the central banks of Hong Kong, Thailand, China and therefore the United Arab Emirates, as well as 20 commercial banks from those regions. according to a report by the BIS revealed in June, around 90th of central banks are considering the adoption of CBDCs.
(ANA PAULA PEREIRA, Cointelegraph, 2022)