A global standard for banks’ exposure to crypto assets has been approved by the Bank for International Settlements (BIS) Group of Central Bank Governors and Supervisors. The standard, which sets a 2% limit on crypto reserves between banks, will be implemented from January 1, 2025, according to an official announcement on December 16.
The report, titled “Prudent Exposure to Crypto-assets”, presents the final standard framework for banks in relation to digital assets, including tokenized traditional assets, stable metals and unsecured cryptocurrencies, as well as stakeholder views gathered from a consultation launched in June time The Basel Committee on Banking Supervision has indicated that the report will soon be included as a new chapter in the consolidated Basel framework.
The BIS statement emphasized that the global banking system’s direct exposure to digital assets remains relatively low, but recent developments highlight “the importance of having a minimum framework to mitigate risks for internationally active banks”. It also stated:
“Unsecured crypto-assets and ineffective stabilization mechanisms will be subject to conservative economic treatment. The standard will provide a stable and prudent global regulatory framework for the exposure of internationally active banks to crypto-assets that promotes responsible innovation while maintaining financial stability.”
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Pablo Hernández de Kos, chairman of the Basel Committee and governor of the Bank of Spain, said about the standard.
“The Committee’s standard on cryptoassets is 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 work program for 2023-2424, approved by GHOS today, aims to further strengthen the regulation. Supervision and practices of banks around the world. In particular, it focuses on emerging risks, digitalisation, climate finance risks and Basel III monitoring and implementation.”
The BIS revealed the results of its multilateral central bank digital currency (CBDC) trial in September, after a month-long test phase that enabled $22 million worth of cross-border transactions. The pilot program involved the central banks of Hong Kong, Thailand, China and the United Arab Emirates, as well as 20 commercial banks from those regions. According to a BIS report released in June, about 90% of central banks are considering adopting CBDCs.