The Bank for International Settlements (BIS) Group of Central Bank Governors and Heads of Supervision (GHOS) has approved a global standard for banks’ exposure to crypto assets. The rule, which sets a 2% cap on banks’ cryptocurrency reserves, is due to apply on January 1, 2025, as was officially announced on December 16.
Titled “Prudential treatment of cryptoasset exposures,” the report presents the final standard framework for banks regarding exposure to digital assets, including tokenized traditional assets, stablecoins, and cryptoassets. unbacked cryptocurrencies, as well as stakeholder feedback gathered from a consultation launched in June. The Basel Committee on Banking Supervision noted that the report will shortly be incorporated as a new chapter into the consolidated Basel Framework.
The BIS announcement highlights that the global banking system’s direct exposure to digital assets remains relatively low, but recent events have highlighted “the importance of having a robust minimum framework for internationally active banks to mitigate risks.” The following is also stated:
“Unbacked crypto assets and stablecoins with ineffective stabilization mechanisms will be subject to conservative prudential treatment. The rule will provide a robust and prudent global regulatory framework for internationally active banks’ exposures to crypto assets that promotes responsible innovation while preserve financial stability.
Pablo Hernández de Cos, president of the Basel Committee and Governor of the Bank of Spain, pointed out about the regulation:
“The Committee’s standard on crypto assets is yet another example of our commitment, willingness and ability to act in a globally coordinated manner to mitigate emerging risks to financial stability. The Committee’s 2023-24 work program approved today by the GHOS intends to further strengthen the regulation, supervision and practices of banks around the world, in particular focusing on emerging risks, digitalisation, climate-related financial risks and supervision and enforcement of Basel III.”
The BIS released the results of its multi-jurisdictional central bank digital currency (CBDC) pilot program in September, following a month-long trial phase that enabled $22 million worth of cross-border transactions. The central banks of Hong Kong, Thailand, China and the United Arab Emirates participated in the pilot program, as well as 20 commercial banks from those regions. According to a BIS report published in June, around 90% of central banks are considering adopting a CBDC.
Clarification: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information presented here should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the entire amount invested may be lost. The services or products offered are not directed or accessible to investors in Spain.