Basel Committee Endorses Global Crypto Banking Rules to Be Implemented by 2025

The rules suggested that a bank's exposure to certain crypto assets must not exceed 2% and should generally be lower than 1%.

AccessTimeIconDec 16, 2022 at 5:31 p.m. UTC
Updated Dec 16, 2022 at 5:48 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

The Basel Committee on Banking Supervision (BCBS) has endorsed its global crypto banking rules for implementation by Jan. 1, 2025, according to an emailed statement on Friday.

An accompanying document by the committee, which is the primary global standard setter for the prudential regulation of banks, suggested that a bank's exposure to certain crypto assets must not exceed 2% and should generally be lower than 1%. These particular assets are tokenized traditional assets including non-fungible tokens, stablecoins and unbacked crypto assets that don't meet classification conditions. Meanwhile, those assets from the list above that do meet the criteria "are subject to capital requirements based on the risk weights of underlying exposures as set out in the existing Basel Framework."

Previously a group of eight traditional finance lobby groups had written to the committee suggesting that just a 1% cap on banks could be too restrictive and could derail innovations using distributed ledger technology. Now there is more wiggle room.

“Today’s endorsement by the GHOS (Group of Central Bank Governors and Heads of Supervision) marks an important milestone in developing a global regulatory baseline for mitigating risks to banks from crypto assets," said Tiff Macklem, chair of the GHOS, the oversight body of the committee.

The classification conditions the committee have set out include ensuring crypto passes a redemption risk test and basis risk test. "The redemption risk test is to ensure that the reserve assets are sufficient to enable the crypto assets to be redeemable at all times," the report said. Meanwhile, the basis risk test "aims to ensure that the holder of a crypto asset can sell it in the market for an amount that closely tracks the peg value," the report said.

Regulators have taken a cautious approach to regulating the crypto sector, which has been extremely volatile lately. Billions of dollars were wiped out of the crypto market within a year after the fall of Terra, FTX and their related companies and tokens.

The crypto standards the committee set out will be added into the consolidated Basel Framework shortly, the report said. Whether or not these rules are applied will be up to individual jurisdictions.


Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Camomile Shumba

Camomile Shumba is a CoinDesk regulatory reporter based in the UK. She previously worked as an intern for Business Insider and Bloomberg News. She does not currently hold value in any digital currencies or projects.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.