Bitcoin part of highest risk category in Basel's new bank capital plan
June 10, 2021. Summarized by summa-bot.
Compression ratio: 42.4%. 1 min read.
The new risk weight means that banks would have to hold one dollar in capital for each dollar worth of exposure it has to Bitcoin.
The Basel Committee on Banking Supervision (BCBS), a global committee of banking supervisors and central banks, has proposed new requirements for banks that want to hold cryptocurrencies like Bitcoin (BTC).
In a consultation paper published Thursday, the committee provided preliminary proposals for the prudential treatment of crypto exposure by banks.
According to the paper, this would ensure that there is sufficient capital to absorb a full write-off of crypto asset exposures “without exposing depositors and other senior creditors of the banks to a loss. ”
The BCBS proposed to split crypto assets into two broad categories: those eligible for treatment under the Basel Framework with some modifications; and assets like Bitcoin (BTC), which are subject to the new conservative prudential treatment.