The Bank for International Settlements (BIS) has taken a significant step by unveiling a report that introduces new regulations for banks dealing with Group 2 cryptoassets, which include well-known cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), and XRP. These new measures are designed to enhance oversight of the risks associated with the extreme volatility characteristic of these digital assets.
The report categorizes these cryptoassets as high-risk, leading to a stipulation that a bank’s total exposure to them must be limited to no more than 1% of its Tier 1 capital. This approach reflects a prudent stance, given the notorious rapid and considerable price changes inherent to these currencies.
The #BaselCommittee has finalized its disclosure framework, which includes standardized tables and templates for reporting banks’ cryptoasset exposures. These regulations will take effect on January 1, 2026. Read more here:
https://t.co/EL2aad1YgP
pic.twitter.com/dcNDOwKH69
– Bank for International Settlements (@BIS_org)
July 17, 2024
Starting January 1, 2026, financial institutions will be required to implement more thorough reporting practices, encompassing both qualitative and quantitative aspects. These reports will concentrate on activities related to cryptocurrencies and the liquidity necessary for ensuring financial stability.
Additionally, the BIS is placing a strong emphasis on stablecoins. The new guidelines favor stablecoins that are supported by established financial institutions, such as JPMCoin from JPMorgan. Conversely, stablecoins operating on permissionless blockchains, like Tether’s USDT and Circle’s USDC, may encounter more stringent regulations.
These regulations, effective from January 1, 2026, seek to mitigate the risks stemming from fluctuations in the cryptocurrency market, as highlighted in the BIS report.
**Disclaimer:**
The opinions expressed by the author, or any individuals referenced in this article, are intended for informational purposes only and do not constitute financial, investment, or other forms of advice. Engaging in cryptocurrency investments or trading carries the risk of financial loss.
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