Central banks decide on stricter crypto requirements

DThe Basel Committee on Banking Supervision has passed stricter requirements for investments in crypto assets. The supervisory body of central bank governors and heads of financial supervisory authorities (GHOS) approved the list of measures at their meeting on Friday. Banks involved in crypto assets such as Bitcoin The investment is at risk of high equity surcharge, which can have a risk weight of 1250 percent for particularly risky forms of investment.

In the standard approach to Basel capital rules (Basel III), for which the Basel Committee is responsible, the risk weight for loans is 8 per cent. With a risk weighting of 1250 percent, investing in particularly risky crypto assets becomes distasteful to banks. Furthermore, the Basel Committee, affiliated with the Basel-based Bank for International Settlements (BIS), limits banks’ potential investment in high-risk digital assets.

On the other hand, the Basel Committee recognizes that there are also high-quality crypto assets, such as currency-based stablecoins or digital securities (tokens) that are based on real assets. Banks can then apply Basel capital norms like normal loans or securities. However, crypto values ​​must then also pass the risk test.

after presenting central banks And observers, the banks are said to have invested less than 1 percent of their liable capital (Tier 1) in riskier crypto assets. If this limit is exceeded, a strict risk weight of 1250 per cent is applicable on the excess amount. If a bank is above 2 percent overall, it should apply higher risk weights to all risky crypto assets.

But even digital assets that do not belong to the first quality level must be backed by banks with 100 percent equity. The Basel Committee, established in 1974, sets international standards for banking supervision such as the Basel III capital rules. It consists of the central banks and supervisory authorities of 27 countries as well as the European Central Bank for the European Union (EU).

Since the beginning of the year, the prices of many crypto assets have fallen. Basel Committee and BIS criticize digital assets like bitcoin. BIS is developing digital central bank money with leading central banks.