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Basel revises bank crypto capital plan to include Blockchain
July 01, 2022
Cryptoassets have tumbled in value in recent weeks partly triggered by the collapse of terraUSD, a stablecoin whose value was derived by complex algorithmic processes.
As a result, regulators like the Basel Committee are worried about the potential risks to the financial system from the lightly regulated crypto sector even though it is still small relative to the size of global stock, bond and derivatives markets.
The proposals on Thursday mark Basel’s second public consultation on cryptocurrencies, which would require banks to take a conservative stance when setting aside capital for crypto holdings.
The Committee’s proposal said cryptoassets which are not backed by assets like traditional currencies, and stablecoins that do not have effective stabilisation mechanisms, should continue to be subject to a conservative prudential treatment with regard to capital set aside for potential losses.
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