In June this year, a committee of financial regulators, the Basel Committee on Banking Supervision (BCBS), announced strict requirements for banks that want to put bitcoin (BTC) on their balance sheets. A number of major banks, including Deutsche Bank and JPMorgan, are now responding to these demands. And it turns out they’re not happy about it.
The BCBS is an international committee for banking supervisors. The body is located in the office of the Bank of International Settlements (BIS) in Basel, Switzerland, but is a separate entity with its own board. It has no direct powers, but standards issued are usually identified as such.
The new banking standards require a bank to have a risk weight of 1,250% for crypto, meaning that they must cover their crypto management 100% with fiat currency. from a article A report from The Wall Street Journal now shows that a number of banks that are part of the Global Financial Markets Association, including Deutsche Bank and JPMorgan, are not happy. They came up with a joint response:
“The committee said in June that banks must apply a risk weight of 1,250% to bitcoin, which is similar to the asset’s deduction from capital. If a bank holds $100 in bitcoin exposure, it would give rise to risk-weighted assets of $1,250, which when multiplied by the minimum capital requirement of 8% results in putting at least $100 aside.”
With the conclusion:
“We find the proposals in the consultation so overly conservative and simplistic that they would effectively preclude banks’ involvement in crypto asset markets,”
Whether the BCBS will adjust the standards after this response remains to be seen. In any case, it is a positive sign that large banks are showing an interest in investing in or offering services regarding crypto and bitcoin.