Bank for International Settlements to Allow Banks to Hold 1% of Reserves in Bitcoin
Despite its skeptical approach to digital currencies, exacerbated by the recent crypto market crash, the Bank for International Settlements (BIS) intends to expand opportunities for a new asset class by allowing banks to hold up to 1% of reserves in cryptocurrencies, such as bitcoin.
The Basel Committee on Banking Supervision (BCBS), in its advisory paper published on June 30, set a limit of 1% of Tier 1 capital for the riskiest class of crypto assets. The limit will apply to unbacked cryptocurrencies like bitcoin and to assets like algorithmic stablecoins that are backed by other cryptocurrencies.
The Committee is awaiting comments and suggestions from the banking community until the end of September and promises that until this date it will closely monitor the rapidly changing and unstable crypto market. The standards, which the Committee intends to complete by the end of the year, could be tightened if shortcomings in consultation proposals are identified or new elements of risk emerge.
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