The Basel Committee on Banking Supervision, an international forum for discussion and recommendations for regulating the banking industry, proposed in June new rules for institutions that want to operate in the crypto market. According to the committee, banks should have sufficient capital to match their exposures to riskier assets, i.e., operate without leverage.
According to an article published by CNN Brazil, for assets such as bitcoin, banks should reserve enough capital to absorb the impact of total accounting loss. The rules suggest that institutions should apply a risk weight of 1,250% to bitcoin.
This week, the Global Financial Markets Association, which represents JPMorgan Chase and Deutsche Bank, and five other associations, published a letter opposing the measure. “We consider the proposals in the consultation to be so overly conservative and simplistic that they would, in effect, prevent bank involvement in the cryptoasset markets”, the document says.
Banks’ involvement would value blockchain, say institutions
Organizations represented by the Global Financial Markets Association pointed out that public and regulators would benefit from banks engaging with crypto assets. These institutions have long experience in identifying, monitoring, and managing risks. However, the committee’s proposals make involvement unreasonable due to high costs.
Banking organizations opposed to the rules also opposed the inclusion of the stablecoin committee, which discusses standards for this type of instrument.
