Endorsement billed as step toward mitigating bank-sector risks; Crypto volatility writ large in 2022 by bankruptcies like FTX
The body overseeing the Basel Committee on Banking Supervision
endorsed global prudential standards for banks’ exposure to crypto
assets, seeking to counter threats from virtual coins.
The backing
from the Group of Central Bank Governors and Heads of Supervision is an
important step toward “mitigating risks to banks” from digital tokens,
Tiff Macklem, chair of the oversight body and governor of the Bank of
Canada, said in a statement on Dec. 16.
The standards outline two groups of crypto assets
— one for tokens that fully meet a set of conditions and another for
coins that fail to meet any of them.
The
first group is subject to capital requirements as set out in the
existing Basel Framework. For group two crypto assets, a bank’s total
exposure must not exceed 2% of Tier 1 capital and should generally be
lower than 1%.
The chaotic bankruptcy of Sam
Bankman-Fried’s FTX crypto empire, which may have left more than a
million creditors, has injected urgency into regulatory efforts to curb
risks from the digital-asset industry...
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