Bank for International Settlements (BIS) report on "Bank Exposure to Cryptocurrency Assets": Banks can hold up to 1% of tier 1 capital in Bitcoin

The Basel Committee on Banking Supervision, a part of the Bank for International Settlements (BIS), released its second public consultation on "Prudential Treatment of Banks' Crypto Asset Exposures" on 6/30. This report builds upon the initial proposal from last year and incorporates feedback from stakeholders.

The Basel Committee on Banking Supervision, a part of the Bank for International Settlements (BIS), released its second public consultation on "Prudential Treatment of Crypto-Asset Exposures" on 6/30. This report builds upon last year's initial proposal and feedback from stakeholders.

In this report, crypto-assets are categorized into two groups. The first group includes tokenized traditional assets and stablecoins that meet the Classification condition standards, while the second group comprises tokenized traditional assets, stablecoins, and unsupported crypto-assets that do not meet the standards. Bitcoin falls into the second group of crypto-assets. BIS recommends that banks should not have a significant exposure to such assets, with a proposed limit of 1% of Tier 1 capital, subject to review. "Banks' exposure to the second group of crypto-assets should be limited. Banks must apply risk weights to the second group of crypto-assets and include them in their overall risk calculation."