Stablecoins Nearing Regulatory Shift: BCBS Proposal Sparks Change
The Basel Committee on Banking Supervision (BCBS) has recently proposed redefining the risk landscape for cryptocurrencies, particularly aiming to alter the perception of stablecoins.
Their proposal suggests a reevaluation of criteria, intending to position stablecoins as lower-risk entities compared to fiat-based cryptocurrencies like Bitcoin (BTC). BCBS, historically cautious about crypto, had previously advocated for a significant maximum risk weight of 1,250% for publicly traded digital assets like Bitcoin.
This meant banks were required to maintain capital reserves that matched their exposure to such assets, with strict limitations on allocating only 2% of their core capital to these riskier assets.
However, BCBS is now exploring the potential for cryptocurrencies with “effective stabilization mechanisms,” such as stablecoins, to receive more favorable treatment under a proposed “preferential Group 1b regulatory approach.”
This marks a potential departure from current norms in applying capital requirements. The proposal suggests that stablecoins might be subjected to regulatory measures based on the risk weights of their underlying assets, potentially aligning them with the existing Basel standards framework rather than the stricter regulations imposed on BTC and other alternative cryptocurrencies.
READ MORE: USA Introduces New Standards for Clearer Crypto Reporting
Additionally, BCBS has put forth proposals mandating banks to disclose their involvement in cryptocurrency-related activities.
These disclosure requirements encompass comprehensive details on both qualitative and quantitative aspects of crypto-related risks, including specifics on the bank’s exposure, activities, and associated liquidity requirements. BCBS aims to implement these disclosure regulations by January 1, 2025.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
