The Basel Committee on Banking Supervision today issued a public consultation on preliminary proposals for the prudential treatment of banks' cryptoasset exposures. While banks' exposures to cryptoassets are currently limited, the continued growth and innovation in cryptoassets and related services, coupled with the heightened interest of some banks, could increase global financial stability concerns and risks to the banking system in the absence of a specified prudential treatment. Given the rapidly evolving nature of this asset class, the Committee believes that policy development for cryptoasset exposures is ... (full story)

The past few years have seen rapid growth in cryptoassets and the estimated market capitalisation of some of these assets have recently reached new all-time highs. While the cryptoasset market remains small relative to the size of the global financial system, and banks’ exposures to cryptoassets are currently limited, its absolute size is meaningful and there continues to be rapid developments, with increased attention from a broad range of stakeholders. Cryptoassets have given rise to a range of concerns including consumer protection, money laundering and terrorist financing, and their carbon footprint. The ... (full story)

The world’s most influential banking regulator proposed that banks with bitcoin (BTC, +9.21%) exposure should set aside capital to cover losses in full. The Bank for International Settlements' Basel Committee suggested splitting crypto assets into two groups: those eligible for treatment under existing frameworks and those that are not. The first category would comprise tokenized assets and stablecoins, which "with some modifications and additional guidance," would be eligible for treatment under existing rules. Bitcoin and similar cryptocurrencies would fall under the latter category "since these pose additional and ... (full story)