Basel Committee proposes first bespoke capital rules for cryptocurrency assets
10 Jun 2021
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Banks to face tough capital requirements for holding Bitcoin and Altcoins
- Treatment of stablecoins in-line with assets such as stocks, bonds
- Banks need to set aside enough capital to cover any losses in Bitcoin in full
- 1,250% risk weight proposed to be applied to bank’s exposure to Bitcoin, cryptos
That puts Bitcoin in the highest risk category in terms of bank capital exposure and in practice, means that banks may need to hold a dollar in capital for each dollar worth of Bitcoin holdings – based on the 8% minimum capital requirement that is.
The proposal here isn’t taking effect just yet as it will be open to public comment first with the committee noting that these policies may change several times as the market evolves. That allows room for some tokens to perhaps see lower capital requirements.