Cyber ​​Currency – Crypto: Regulators Warn Banks To Be More Careful

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The Basel Committee on Banking Supervision warns financial institutions to be particularly careful with risky cyber currencies. They should be conservative in depositing equity capital as collateral for potential losses of such cryptocurrencies, the committee urged Thursday.

Such particularly risky cyber currencies are classified by the regulators as their own group of cryptocurrencies. The so-called group two includes cyber currencies such as Bitcoin, which are not pegged to other values, as well as stablecoins with stabilization mechanisms.

Most recently, cryptocurrencies on the exchange have been subject to major upheavals. Stablecoins also came under enormous pressure, although this should actually rule out price antics, as they are linked to other values ​​such as the dollar. In the case of cyber currencies such as Bitcoin, where this is not the case, huge price jumps are the order of the day. Nevertheless, the stablecoin TerraUSD, for example, has recently experienced a real price drop.

limit required
Among other things, the Basel Committee has proposed a limit on banks’ exposure to such risky Group Two cryptocurrencies. Under this Directive, banks’ exposure to such equities may not exceed one percent of Common Equity Tier 1 capital (Tier 1). As early as June 2021, the Cyber ​​Currencies Commission issued a comprehensive document dividing it into two risk classes. The committee maintained this basic classification. The new rules should be ready before the end of the year.

The Basel Committee on Banking Supervision, established in 1974, is based at the Bank for International Settlements (BIS) in Basel. It sets the global standards for banking supervision.

Source: Krone

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