Bank for International Settlements Finalizes Policy With 2% Cryptoasset Exposure Cap


The Bank for International Settlements’ (BIS) Basel Committee on Banking Supervision recently released a proposed policy that would set a 2% limit on the amount of banks’ Tier 1 capital held in Bitcoin and cryptocurrencies. 

The policy has the support of the Basel Committee’s supervisory body, the Group of Central Bank Governors and Heads of Supervision (GHOS).

Tier 1 capital refers to a bank’s core capital, which is kept in its reserves and utilized to finance its clients’ commercial activities. Along with declared reserves and a few other assets, it also includes common stock.

Bitcoin would fall under the policy’s Group 2 crypto asset class as an “unbacked cryptoasset.” The policy also mentions that “a bank’s total exposure to Group 2 cryptoassets should not generally be higher than 1% of the bank’s Tier 1 capital and must not exceed 2% of the bank’s Tier 1 capital.”

In June of 2021, the BIS proposed a policy of 1% for global banks, but was countered with a 5% reserve limit.

Chair of the GHOS Tiff Macklem stated:

Today’s endorsement by the GHOS marks an important milestone in developing a global regulatory baseline for mitigating risks to banks from cryptoassets. It is important to continue to monitor bank-related developments in cryptoasset markets. We remain ready to act further if necessary.

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Deniz Saat is an IT services specialist, technical writer and editor for BTC Times. His mission is to onboard as many people as possible into the Bitcoin overlay through education and content creation.

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