Group of Central Bank Governors and Heads of Supervision (GHOS) of the Bank for International Settlements (BIS) have finalized a set of rules for central banks exposures to cryptocurrencies, including: tokenised traditional assets, stablecoins and cryptocurrencies, which they named them as “unbacked cryptoassets”.
The standard is in the form of a new chapter of the consolidated Basel Framework (SCO60: Cryptoasset exposures) that the committee has agreed to implement by 1 January 2025, and tasked the committee to monitor the implementation and effects of the new standard.
The standards for the treatment of cryptoassets among banks will be implemented by Jan. 1, 2025. The report, “Prudential treatment of cryptoasset exposures,” explains the final structure for banks regarding exposure to digital assets, including tokenized traditional assets, stablecoins, and unbacked crypto-assets which they refer to cryptocurrencies as Bitcoin or Ethereum.
The Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of the Basel committee on banking supervision, met on 16 December to endorse a finalised prudential standard on banks’ crypto-asset exposures and the committee’s work program and strategic priorities for 2023 and 2024.
“Today’s endorsement by the GHOS marks an important milestone in developing a global regulatory baseline for mitigating risks to banks from cryptoassets. It is important to continue to monitor bank-related developments in cryptoasset markets. We remain ready to act further if necessary”
Tiff Macklem, Chair of the GHOS and Governor of the Bank of Canada
“The Committee’s standard on cryptoasset is a further example of our commitment, willingness and ability to act in a globally coordinated way to mitigate emerging financial stability risks. The Committee’s work programme for 2023–24 endorsed by GHOS today seeks to further strengthen the regulation, supervision and practices of banks worldwide. In particular, it focuses on emerging risks, digitalisation, climate-related financial risks and monitoring and implementing Basel III”
Pablo Hernández de Cos, Chair of the Basel Committee and Governor of the Bank of Spain
This means that the central banks will be able to hold 2% of their balance sheet in tokens and cryptocurrencies, which I believe Bitcoin will take the leading role, because of its characteristics as the most decentralized network and payment system in the world.
This new regulative framework is very bullish for the crypto market, but also raises concern for the decentralization of entire crypto ecosystem, because more banks will be involved in the blockchain networks as validators in the PoS Proof of Stake chains, which will make them even far more centralized. On the other hand, Bitcoin will remain decentralized as it is, because it is PoW, so no-one can control the network, but fair share of supply could be in the hands of the banks.
Bitcoin will stay as the leader of the pack, because there is no other cryptocurrency similar to BTC and the bitcoin halving which is in May next year will push the price to new ATH records.
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About BIS
The Bank for International Settlements (BIS) is an international financial institution offering banking services for national central banks and a forum for discussing monetary and regulatory policies. The BIS, which is owned by 63 national central banks, also provides independent economic analysis.
