The Basel Committee on Banking Supervision (BCBS), a committee of the Bank for International Settlements (BIS) has made a proposal for limiting the banks’ total exposures to “Group 2 cryptoassets to 1% of Tier 1 capital.”
This was in its consultative document titled “Second consultation on the prudential treatment of cryptoassets,” published on June 30.
Specifically, Group 2 refers to the assets that do not meet classification conditions and includes specific tokenized traditional assets and stablecoins, as well as unbacked crypto assets. As opposed to Group 2, Group 1 includes tokenized traditional assets and stablecoins that meet classification conditions.
In the consultative document by the BIS, the bank said:
“Banks’ exposures to Group 2 cryptoassets will be subject to an exposure limit.
Banks must apply the exposure limit to their aggregate exposures to Group 2 cryptoassets, including both direct holdings (cash and derivatives) and indirect holding (ie those via investment funds, ETF/ETN, special purpose vehicles.”
– Bank of International Settlements (BIS)
With this in mind, “the Committee proposes, therefore, to introduce a new exposure limit for all Group 2 cryptoassets outside of the large exposure rules.” Meanwhile, this provisional limit set at 1% of Tier 1 capital would be reviewed periodically.
The Bank for International Settlements is an international financial institution owned by central banks with the role of ‘fostering international monetary and financial cooperation, and serves as a bank for central banks.’
Commonly referred to as BIS, the bank has been at the forefront in facilitating and advising banks on crypto development globally. In one of its latest, The bank of international settlements (BIS) is launching a market intelligence platform to safeguard against threats to digital assets, part of several projects it is pursuing in its innovation hub.
BIS is also spearheading Project Dunbar, where the South African Reserve Bank (SARB) is among four banks that are testing blockchain-based cross-border payment retails.
You can read the document in full below: