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Bitcoin, Other Crypto Assets Targeted for Strict Banking Regulations



The global benchmark for banking regulations has introduced strict new rules requiring banks to capitalize dollars for every dollar of bitcoin they own.

Basel Committee for Banking Supervision, a group of global central banks and regulators. The plans were announced Thursday in public consultation on how the company intends to treat cryptocurrency assets. It has raised concerns about consumer protection, money laundering and terrorist financing.

“Some digital assets are highly volatile. and may present a risk to the bank as the risk increases,” the Swiss-based Board of Basel said in a statement.

Interest in cryptocurrencies from mainstream financial companies and corporations increase this year master card Inc.

has said it plans to support cryptocurrencies Something in the network and Bank of New York Mellon. Corp.

invested in startup The cryptocurrency Bitcoin rose 3.8% to $37,776.1

5 from Wednesday’s level 5 p.m. ET.

The committee, which includes the US Federal Reserve European Central Bank and other major central banks does not enforce its own rules Instead, it sets minimum standards that regulators around the world can agree on and apply at the local level. The Board Secretariat is located at the Bank for International Settlements, also known as the Central Bank for the Central Bank.

The committee said the bank should apply a 1,250% risk weight to bitcoin, which is “similar to the deduction of assets from capital.” If the bank holds $100 worth of Bitcoin, it creates a risk asset of $1,250, which when multiplied by its capital requirement. A minimum of 8% would result in a deposit of at least $100, the committee said in a statement.

The committee cited the lack of record keeping of these assets and high volatility in its proposed rule. Capital requirements will make bitcoin and other coins equivalent to the most risky assets the bank holds, such as assets where the bank does not have all the information or has a large investment in the company.

In comparison, according to Basel’s guidelines, banks should use a 400% risk-weighted “for non-listed arbitrage.” Basel’s guidelines on residential mortgages, for example, which are relatively safe and secured, are as low as 20%. Real gold held by banks has a 0% risk weight, meaning banks don’t have to hold capital.

The committee proposes less stringent funding requirements for crypto assets that meet certain conditions, such as traditional token assets and stablecoins. This type of digital asset is usually tied to the value of a major currency such as the US dollar and is theoretically less volatile.

These are eligible for treatment under existing Basel rules, while bitcoin is subject to “new conservative conservative treatment.”

The bank has until Sept. 10 to respond to the board’s proposal. Central bank digital currencies were not included in the consultation.

China’s latest warning on cryptocurrencies sends the market in the short term. WSJ’s Aaron Back explains why recent changes in the value of bitcoin, dogecoin, ether and other cryptocurrencies may point to a barrier to cryptocurrencies. Main acceptance. Photo: Dado Ruvic/Reuters.

separate from the Swiss National Bank,

Banque de France and the Bank for International Settlements said Thursday they will conduct a trial of cross-border central bank digital currency transactions.

The trial will involve exchanging the central bank digital euro and central bank digital Swiss franc on a single platform. Transactions will be settled between banks based in France and Switzerland, unlike private cryptocurrencies like bitcoin, the central bank digital currency, if processed, will be formally sanctioned. The cryptocurrency whose value will match the existing currency of the country.

The trial will involve commercial banks including UBS Group. AG

, Credit Suisse Group AG

and naticis to,

Like SIX Digital Exchange and fintech firm R3, this trial is a survey and does not imply that the Swiss National Bank or Banque de France plans to issue a wholesale central bank digital currency. The bank said in a statement.

Bitcoin, Dogecoin, Ethereum: Cryptocurrency Market

write to Simon Clark at simon.clark@wsj.com and Caitlin Ostroff at caitlin.ostroff@wsj.com.

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