Less Ads, More Data, More Tools Register for FREE

Bitcoin faces strictest capital rules under global regulator's plans

Thu, 10th Jun 2021 13:43

(Alliance News) - Banks holding Bitcoin should face strict new capital requirements, a global regulator said on Thursday.

The Basel Committee on Banking Supervision, a global organisation of major central banks and financial regulators, proposed that cryptoassets be split into two groups, with Bitcoin classed as a risky asset facing the strictest rules.

Group 1 cryptoassets, including stablecoins and tokens backed by cash or traditional asset classes, would be treated under the existing regulatory framework with some modifications, BCBS said.

But Group 2 cryptoassets, including Bitcoin and Ethereum, would be subject to a new, conservative treatment as they pose "additional and higher risks". Under the proposals, banks would be required to hold USD100 in cash for every USD100 of bitcoin on their balance sheet.

Cryptocurrencies issued by central banks would not fall under the proposed rules.

Bitcoin was up 0.2% against the dollar to USD37,459.20 on Thursday afternoon.

While banks currently have little exposure to cryptoassets, the growth and innovation in crypto along with "the heightened interest of some banks" could risk global financial stability if there are no new rules, BCBS said.

Banks including Bank of New York Mellon Corp and Wells Fargo & Co have said they will start offering cryptocurrency services to their clients.

The proposals form the beginning of a public consultation which runs until September 10. BCBS rules are not binding, but members are expected to implement them.

By Ivan Edwards; ivanedwards@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.

Login to your account

Don't have an account? Click here to register.

Quickpicks are a member only feature

Login to your account

Don't have an account? Click here to register.