- The Basel Committee says that Banks with BTC exposure should have capital to cover losses.
- The committee proposed that crypto-assets should be grouped into two forms.
- Everyone can respond to the Basel Committee’s proposal from now till September 10.
The Basel Committee has proposed that any Bank having exposure to Bitcoin (BTC) should put some capital aside to cover loss completely.
Not this alone, the Basel Committee emphasized that crypto-assets should be categorized into two different forms, “those eligible for treatment under existing frameworks and those that are not”.
Moreover, the Basel Committee further explained that the first grouping should mainly include tokenized assets and stablecoins. The Committee again mentioned that doing this would help the asset gain modification to be eligible for treatment within any rules.
In particular, Bitcoin and various similar cryptos will be in the latter group, according to the committee. Specifically, putting BTC to the latter category is however subjected to a new conservative prudential treatment.
In addition, the committee even suggested that both BTC, ETH, and many other digital assets have a risk of 1,250%. Due to this, Banks need to have equal capital to be able to deal with the exposure.
The committee’s proposal said,
“A $100 exposure would give rise to risk-weighted assets of $1,250, which when multiplied by the minimum capital requirement of 8% results in a minimum capital requirement of $100 (ie the same value of the original exposure, as 12.5 is reciprocal of 0.08).”
Furthermore, as per the committee, any response will be welcome from now till September 10.