The Basel Committee on Banking Supervision(BCBS), an international board comprising of regulators and reserve banks have suggested new measures for banks that want to engage in crypto transactions, nevertheless, the proposed measures to be put in place are of stricter nature.
A treatise released on Thursday by the board offered prefatory measures on prudential regulations of crypto by banks.The treatise was also based on the feedback from investors and global names in industries contained in the board’s 2019 discourse.Crypto’s immutable nature coupled with the its likelihood to be used in fraudulent activities made the BCBS advocate that Bitcoin should be 1250% risk-weighted.
According to the treatise, the measure put in place will ensure that banks can forestall risks associated with crypto trade. This is to make sure that bank customers do not record losses.The BCBS also recommended the separation of cryptocurrencies into two major parts; cryptos that can be handled under the Basel framework and cryptos like Bitcoin in which prudential regulations can apply to.
The first group will have crypto assets with stability whereas the other will include Bitcoin and other cryptos that couldn’t meet the standard. With 1250% risk weight on Bitcoin, BCBS forecasts a conservative outcome for crypto holdings. For other cryptos, the board advises that the true meaning of value should be explicitly stated to bring about possibly an outcome which is conservative.
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