Basel Committee Recommends Highest Risk Weight For Bitcoin

The Basel Committee on Banking Supervision, made up of 45 members from 28 jurisdictions, today proposed two sets of regulations for crypto assets. The new offerings offer conservative and prudent treatment of crypto assets such as Bitcoin, without reference to any real support and risk factors. The proposal divided crypto assets into two broad categories, primarily stablecoins and real-world backed security tokens, which, with some modifications, may fall under the current Basel Framework. On the other hand, crypto assets such as bitcoin are subject to a new conservative prudence treatment. The committee opened proposals on the proposal until 10 September. The committee recommended that banks assign a risk weight of 1,250 percent to bitcoin and some other cryptocurrencies. This means banks may have to hold real dollars for every Bitcoin dollar. The risk weight ranges from 0% to 1,250%, depending on the asset type. The official press release stated: “Capital will be sufficient to absorb a full rating of crypto-asset risks without exposing depositors and other top creditors of banks to losses”, how about the Basel Committee's Conservative approach to Influencing Bitcoin? ? The high-risk weighting for bitcoin may seem conservative, but on the good side, this recommendation recognizes bitcoin as an asset class by the world's largest regulatory bank committee. It is also important to note that the proposal is in preparation and makes recommendations. The official proposal also stated that despite the limited use of crypto assets in the banking sector, there is a rapidly growing ecosystem that could pose risks to the financial stability of the banking sector. The Banking Supervision Committee's proposal came soon after El Salvador passed a bill to make Bitcoin legal tender in the country. The article Basel Committee Recommends Highest Risk Weight for Bitcoin first appeared on Coingape.

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