Basel Committee presses on with restrictive requirements for banks’ crypto holdings

The committee of central banks and regulators has proposed a “conservative prudential treatment” of crypto assets that banking groups say is prohibitive.

The Basel Committee on Banking Supervision met Friday and discussed cryptocurrency, among other topics. The committee stated that it would soon publish its second consultative paper with the intention of finalizing guidelines on the prudential treatment of crypto exposure by banks by year-end.

In a Tuesday press release, the committee issued the following statement, which was likely in reference to the recent collapse of the Terra ecosystem:

“Recent developments have further highlighted the importance of having a global minimum prudential framework to mitigate risks from cryptoassets.”

The committee began consultations on the banking sector's risk exposure to cryptocurrency in 2021 and published a paper on its findings at that time. The committee divided crypto assets into two groups, with tokenized traditional assets and stablecoins forming one group, and all others forming the second. A 1,250% risk weight was assigned to the second group, which included all cryptocurrencies and their derivatives. That meant a bank was expected to hold $1 in fiat money for every $1 worth of cryptocurrency it held.

The committee’s “conservative prudential treatment” led to objections from banking industry groups. The International Swaps and Derivatives Association (ISDA), the Futures Industry Association (FIA), the Institute of International Finance, the Chamber of Digital Commerce and five other organizations said in a letter to the committee that the proposed requirements amounted to “material impediments to regulated bank participation in crypto asset markets.”

The Basel Committee on Banking Supervision is made up of central banks and regulators from 28 countries and jurisdictions, as well as three observer countries and five agencies. It is supported by the Bank for International Settlements, but its decisions do not carry the force of law.

from https://ift.tt/U051Xco
https://ift.tt/AFoxHu2

Comments

DeFi isn’t dead, it just needs to fix these 3 critical problems

It’s been a rough year for DeFi, and it may not get any better until projects focus more on security, regulation and usability. The persistent challenges decentralized finance face have been well documented by a handful of analysts and the recent collapse of the Terra ecosystem re-enforced the fact that something is critically wrong with DeFi. I think DeFi today is completely broken for 99% of the population. The promise of a more transparent financial system has been overtaken by greed. UST/LUNA is just the latest in a string of bad developments: — Peter Yang (@petergyang) May 11, 2022 Let's take a look at what experts say DeFi needs to do in order to have another revival. Improved usability To date, the promise of open and uncensored access to a global decentralized financial system has been largely hampered by the complicated interface, confusing multi-step staking processes and lack of clarity surrounding the yields on various tokens. What do you thi...

ENS DAO delegates offer perspective on DAO governance and decentralized identity

AlphaWallet CEO and Spruce co-founder talk about their roles as contributors to the Ethereum Name Service following the project's recent airdrop. Earlier this month, the Ethereum Name Service, or ENS, formed a decentralized autonomous organization, or DAO, for the ENS community. Cointelegraph spoke to two ENS DAO delegates who applied for the opportunity to represent the community and stay involved in the decision making process: Victor Zhang, CEO of AlphaWallet, an open source Ethereum wallet, and Gregory Rocco, co-founder of Spruce, a decentralized ID and data toolkit for developers. Zhang spoke about his experience as an external contributor to ENS and an early supporter since 2018. Zhang initially sought to help ENS by offering Alpha Wallet as a user-friendly tool for resolving .eth names and cryptocurrency wallet addresses. Essentially, if a user inputs an .eth name in the AlphaWallet, it will show the wallet address, and vice versa using reverse resolution. Alpha...

National Futures Association adds rules for members handling digital assets

The CFTC-linked self-regulatory organization (SRO) has disclosure rules for members engaging in activities with BTC and ETH; now, standards of conduct are being added. The National Futures Association (NFA), the United States self-regulatory organization for derivatives markets, has issued a new compliance rule addressing members’ conduct. The new rule complements requirements issued in 2018. The NFA has “well over 100” members that engage in activities with digital asset commodities, but no way to address fraud or misconduct committed by those members, the organization explained to secretary of the Commodity Futures Trading Commission (CFTC) Christopher Kirkpatrick in a Feb. 28 letter as it submitted the proposed new rule for approval. The new rule is modelled on the NFA’s antifraud rules for exchange traded futures and swaps transaction and retail foreign exchange. The NFA is the only registered self-regulatory organization that has delegated authority from the CFTC, giving it a...

Crypto Coin Search

Search This Blog