Basel Committee Proposes Banks Set Aside Capital to Cover Bitcoin Exposure

Thursday 10 June 2021, 10:16 PM AEST - 5 days ago

The worlds most influential banking regulator proposed that banks with bitcoin (BTC, +6.95%) exposure should set aside capital to cover losses in full.

  • The Bank for International Settlements' Basel Committee suggested splitting crypto assets into two groups: those eligible for treatment under existing frameworks and those that are not.
  • The first category would comprise tokenized assets and stablecoins, which "with some modifications and additional guidance," would be eligible for treatment under existing rules.
  • Bitcoin and similar cryptocurrencies would fall under the latter category "since these pose additional and higher risks," an announcement Thursday said.
  • "They would be subject to a new conservative prudential treatment," according to the proposal.
  • The committee proposed a risk weighting of 1,250% for bitcoin, ethereum (ETH, -0.58%) and other cryptocurrencies. That would require banks to hold capital equivalent to the face value of the exposure.
  • "A $100 exposure would give rise to risk-weighted assets of $1,250, which when multiplied by the minimum capital requirement of 8% results in a minimum capital requirement of $100 (ie the same value of the original exposure, as 12.5 is reciprocal of 0.08)," the proposal said.
  • The committee is inviting from stakeholders with a deadline for submission Sept. 10.


The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Read full story on CoinDesk

Disclaimer: The content and views expressed in the articles are those of the original authors own and are not necessarily the views of Crypto News. We do actively check all our content for accuracy to help protect our readers. This article content and links to external third-parties is included for information and entertainment purposes. It is not financial advice. Please do your own research before participating.