A global standard for banks’ exposure to crypto assets has been approved by the Group of Central Bank Governors and Supervisors (GHOS) of the Bank of International Settlements (BIS). The requirement, which imposes a 2% limit on crypto holdings between banks, should be implemented on January 1, 2025, according to an official notification issued on December 16.
The report, titled “Prudent management of cryptoasset exposure”, introduces the final regulatory framework for banks regarding exposure to digital assets, including traditional assets, stablecoins and unbacked cryptocurrencies, as well as stakeholder feedback gathered in a consultation that began in June. The Basel Committee on Banking Supervision announced that the report will be included as a new chapter in the recently strengthened Basel framework.
The BIS announcement shows that the global banking system’s direct exposure to digital assets is relatively low, but recent developments highlight the “need to have a robust minimum framework for globally active banks to mitigate risks”. He further stated that
“Unsupported cryptoassets and stablecoins are subject to conservative prudential treatment with ineffective stabilization mechanisms. The standard provides a robust and prudent global regulatory framework for globally active banks’ exposure to cryptoassets that encourages responsible innovation while maintaining financial stability.”
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Pablo Hernández de Cos, Chairman of the Basel Committee and Governor of the Bank of Spain, said:
“The Committee’s position on cryptoassets is a further example of our commitment, willingness and ability to act globally in a coordinated manner to address financial stability risks. The Committee’s work program approved by GHOS today seeks to further strengthen regulation. Globally, banking supervision and practice; It focuses specifically on emerging risks, digitalisation, climate-related financial risks and monitoring and implementing Basel III.
The BIS announced the results of a multi-jurisdictional central bank digital currency (CBCC) pilot in September, following a month-long testing process that enabled $22 million in cross-border transactions. The pilot program involved the central banks of Hong Kong, Thailand, China and the United Arab Emirates, as well as 20 commercial banks from these regions. According to a BIS report published in June, around 90% of central banks are considering adopting CBDCs.