A proposed capital framework for banks’ cryptoasset exposures would create two tiers of digital assets, with Bitcoin and similar cryptos treated more severely.
The Basel Committee on Banking Supervision launched a consultation on proposed capital rules for cryptos that would divide the emerging asset class into two groups.
The first group would include tokenized versions of traditional assets and stablecoins, which would fall under the existing global capital rules with some modifications.
The second group of more volatile assets, such as Bitcoin, would face tougher capital treatment. Specifically, the committee proposed applying a 1,250% risk weight to banks’ crypto exposures.
“Certain cryptoassets have exhibited a high degree of volatility, and could present risks for banks as exposures increase, including liquidity risk; credit risk; market risk; operational risk (including fraud and cyber risks); money laundering / terrorist financing risk; and legal and reputation risks,” the paper said.
Feedback on the proposed approach is due by Sept. 10.
Given the rapidly-evolving cryptoasset sector, the committee said that it expects the process of developing capital rules for cryptos will take more than one consultation.
The consultation does not cover central bank digital currencies (CBDCs).