{"id":128397,"date":"2021-06-10T15:31:04","date_gmt":"2021-06-10T15:31:04","guid":{"rendered":"https:\/\/precoinnews.com\/?p=128397"},"modified":"2021-06-10T15:31:04","modified_gmt":"2021-06-10T15:31:04","slug":"bitcoin-part-of-highest-risk-category-in-basels-new-bank-capital-plan","status":"publish","type":"post","link":"https:\/\/precoinnews.com\/crypto\/bitcoin-part-of-highest-risk-category-in-basels-new-bank-capital-plan\/","title":{"rendered":"Bitcoin part of highest risk category in Basel's new bank capital plan"},"content":{"rendered":"

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).<\/p>\n

In a consultation paper published Thursday, the committee provided preliminary proposals for the prudential treatment of crypto exposure by banks.<\/p>\n

The paper built on the contents of the committee\u2019s 2019 discussion paper and responses received from various stakeholders and international industry figures.<\/p>\n

Crypto\u2019s perceived volatility and potential for illicit use led the BCBS to recommend a 1,250% risk weight to Bitcoin. This essentially means that banks must hold one dollar in capital for each dollar worth of exposure it has to Bitcoin.<\/p>\n

According to the paper, this would ensure that there is sufficient capital to absorb a full write-off of crypto asset exposures \u201cwithout exposing depositors and other senior creditors of the banks to a loss.\u201d<\/p>\n

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.<\/p>\n

<\/p>\n

Related: <\/em>Global banking regulator plans to hold consultation on crypto exposure<\/em><\/strong><\/p>\n

The first category would include tokenized traditional assets as well as \u201ccrypto assets with effective stabilization mechanisms,\u201d i.e. stablecoins.<\/p>\n

The second group includes Bitcoin and other assets that \u201cfail to meet any of the classification conditions\u201d like applying a stabilization mechanism.<\/p>\n

The BCBS noted that a high risk weight of 1,250% will lead to a \u201cconservative outcome\u201d for direct exposures of crypto assets. Regarding crypto derivatives, however, \u201ccare should be taken in defining what the \u2018value\u2019 is in the formula to ensure the outcome is similarly conservative,\u201d the committee noted.<\/p>\n

Source: Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The Basel Committee on Banking Supervision (BCBS),<\/p>\n","protected":false},"author":3,"featured_media":128396,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"yoast_head":"\nBitcoin part of highest risk category in Basel's new bank capital plan - Pre Coin News<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/precoinnews.com\/crypto\/bitcoin-part-of-highest-risk-category-in-basels-new-bank-capital-plan\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Bitcoin part of highest risk category in Basel's new bank capital plan - Pre Coin News\" \/>\n<meta property=\"og:description\" content=\"The Basel Committee on Banking Supervision (BCBS),\" \/>\n<meta property=\"og:url\" content=\"https:\/\/precoinnews.com\/crypto\/bitcoin-part-of-highest-risk-category-in-basels-new-bank-capital-plan\/\" \/>\n<meta property=\"og:site_name\" content=\"Pre Coin News\" \/>\n<meta property=\"article:published_time\" content=\"2021-06-10T15:31:04+00:00\" \/>\n<meta name=\"author\" content=\"mediabest\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:image\" content=\"https:\/\/precoinnews.com\/wp-content\/uploads\/2021\/06\/Bitcoin-part-of-highest-risk-category-in-Basels-new-bank-capital-plan.jpg\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"mediabest\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"1 minute\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/precoinnews.com\/crypto\/bitcoin-part-of-highest-risk-category-in-basels-new-bank-capital-plan\/\",\"url\":\"https:\/\/precoinnews.com\/crypto\/bitcoin-part-of-highest-risk-category-in-basels-new-bank-capital-plan\/\",\"name\":\"Bitcoin part of highest risk category in Basel's new bank capital plan - 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