A group of banking regulators has decided to swot the capital requirements for crypto assets to determine how much banking Institutions should set aside to prevent further risks from holding of cryptocurrency assets.
According to a report on Thursday, the Basel Committee, comprising of global banking regulators from Europe, the United States, and Japan, agreed to issue a discussion paper on the matter.
The note proposes for the prudential treatment of crypto assets, such as bitcoin, which are not pegged to any physical asset or fiat currency, with committee reiterating that “the prudential treatment of banks’ crypto-asset exposures should appropriately reflect the high degree of risk of crypto assets.”
In addition to that, the committee plans to consult stakeholders for their opinions toward the issues related to the matter, following the ongoing activities in the crypto-asset markets.
The committee also heightened the pressure on lenders/banks to ignore the tarnished Libor interest rate benchmark, which already got a lot of banks been fined for trying to rig.
Already, the United States and Britain have demanded that lenders should switch to using rates compiled by their central banks in the next two year.
“The committee places a high priority on this issue and expects all banks to be adequately prepared to meet the transition timeline,” the regulators further noted.
Crypto assets spurred intense regulatory concerns just after Facebook introduce plans for its Libra cryptocurrency project, the committee noted, adding that it will “consider whether any further regulatory or supervisory measures are warranted to help achieve this outcome.”
Meanwhile, a report by Coinfomania in October noted that the Bank of Canada is planning to launch its digital currency, in an effort to reduce the threats associated with digital currencies on financial systems.
The bank stressed that “cryptocurrencies may become a direct threat to our ability to implement monetary policy and lender of last resort (LOLR) role.”