There will be a global standard for banks about holding bitcoin (BTC) and other crypto on the balance sheet. The Group of Central Bank Governors and Heads of Supervision (GHOS) of the Bank of International Settlements (BIS) has set a limit of 2 percent for crypto on banks’ balance sheets.
The #BaselCommittee has published a global prudential standard for banks’ exposures to cryptoassets, whereby unbacked cryptoassets and stablecoins with ineffective stabilization mechanisms will be subject to a conservative prudential treatment https://t.co/cVVHxnreVD pic.twitter.com/qFZHxrXBpx
— Bank for International Settlements (@BIS_org) December 16, 2022
Crypto regulations from January 1, 2025
The intention is for countries to implement the law in their own laws and regulations on 1 January 2025. It is striking that this limit of 2 percent also includes traditional assets that are tokenized on a blockchain. For example, tokenized shares of Apple are treated differently than normal shares of the company.
The announcement of the BIS, or the Bank for International Settlements (BIS), makes it clear that direct crypto exposure within the traditional system is currently still low. But recent developments, such as the collapse of FTX, make it clear that it is important to have a legal framework in place to contain the risks, the BIS explains.
The aim of this framework is to guarantee the stability of the financial system. The BIS does not like the exposure of traditional institutions to crypto becoming too high, partly due to the fact that the industry is currently not proving itself to be a safe and stable industry. At the same time, the rules should not stand in the way of innovation too much.
CBDC pilot of the BIS
Incidentally, the BIS is active on several fronts within the crypto industry. It is also currently developing one central bank digital currency (CBDC). In September, the Central Bank of Central Banks shared the results of a months-long pilot which ran across several national borders.
The BIS arranged a total of USD 22 million worth of transactions via this digital currency. The central banks of Hong Kong, Thailand, China and the United Arab Emirates, among others, participated. Furthermore, there were also 20 commercial banks that participated in the project.
According to a survey by the BIS, 90 percent of central banks are considering adopting their own CBDC. The question is when the first Western central bank will introduce its own CBDC.