The Committee is preparing for more and more banks to hold cryptocurrencies. Expect the responses to be submitted before September 10, 2021.
The Basel Committee on Banking Supervision, a forum that brings together banking watchers from around the world, asked financial institutions to count on enough reserve capital to cover losses in any bitcoin holdings.
The information appears in a document published on March 13, 2020. The document says about a proper Design of a prudential treatment for cryptocurrencies. This document compiles data from a questionnaire that previously circulated on December 13, 2019.
The document explains in detail on page 11, that in a treatment of liquidity risk, the crypto assets would be subject to stable financing required at 100%.”
Regarding this working paper, the regulatory entity again opened a public consultation on June 10, 2021, and hopes that the answers on the matter will be posted before September 10 of this year on its website.
In the press release that the Basel Committee prepared to show this set of proposals, it divides cryptocurrencies into two large-scale groups: those that can receive treatment under the existing Basel framework with some slight upgrades, including stablecoins and tokenized financial assets. and those that receive better treatment for being crypto assets with greater risk, with bitcoin heading first.
More and more banks want to integrate cryptocurrency custody services in their stock; a good example of these intentions is the U. S. Bank. This bank is one of the largest financial entities in the United States of America, and it intends to include this service for its clients.
Cryptocurrencies Would Turn Into an Essential Feature for the Banking Sector
The Basel Committee received on March 13, 2020, various comments from interested parties. The comments, in PDF format, appeared on their website.
According to said financial entity, given these potential advantages, cryptocurrencies could become essential for the banking sector. Therefore, it is also vital to avoid imposing an oppressive framework on banks’ exposures to these assets from the outset.
The Canadian Banking Association agreed with BBVA on their idea about cryptocurrencies and their underlying technologies as benefits that facilitate peer-to-peer interactions and promote efficiency.
The Japanese Bankers Association (JBA) saw that high-risk cryptocurrencies could be the cause to set a conservative prudential treatment at this phase. The JBA acknowledges that skepticism remains about the value of cryptocurrencies and their sustainability, particularly towards those types of cryptocurrencies that have no natural value.
The JBA believes that such conservative treatment, including the definition of high-risk cryptocurrencies, should be a provisional plan if it gets incorporated into prudential standards.
For this association, although the sustainability of the value of crypto assets remains under a veil of uncertainty, there are still chances to keep studying these assets as a value traded in the market; For this reason, the JBA says that it cannot deny that, in the future, the value of crypto assets will get more stable.
By: Jenson Nuñez
