Bitcoin is expected to have the strictest capital needs for banks due to its high degrees of volatility, while stable and low-risk currencies will be valued as stocks, the Bank for International Settlements said in a report Thursday.
The Basel Committee on Banking Supervision, which is the strictest organization of central bank representatives when it comes to setting banking standards, has said banks have $1 of capital for every bitcoin dollar they have.
This is due to the volatile nature of bitcoin and similar cryptocurrencies that prevent it from meeting certain conditions, for example, related to credits and the threat of the market, established in the Basel framework. The Basel framework is commonly identified as the people’s gold for banking regulation. and threat classification of Bitcoin and other similar cryptocurrencies, as well as decentralized monetary products and fungible tokens, are considered a very important threat and therefore deserve to be subject to the strictest restrictions imaginable.
However, not all crypto assets are that complicated: inventory tokens, for example, comply with the Basel framework and are therefore subject to more flexible rules, similar to inventories and solid currencies have also been valued as less dicy than cryptocurrencies. connected to fiat currencies, such as the US dollar, which protects them from maximum volatility. However, the effectiveness of these “stabilization mechanisms” must be frequently evaluated.
“While the cryptoasset market remains small for the duration of the global monetary formula and banks’ exposure to cryptoassets is limited lately, their absolute duration is significant. “The BIS explained the importance of the new regulations, adding that the immediate progression of the investment sector has also influenced.
The committee also made express reference to customer protection, cash laundering, terrorist financing and the environmental effect on cryptoassets in its report, noting that those points meant that cryptography needed stricter regulation. many regulators around the world.
Environmental reasons are one of the main reasons for the continued crackdown on cryptography in China, which has already forced crypto miners to stop their activities and in the United States, hackers shut down the Colonial Pipeline won a crypto ransom that the government only partially. Crypto scams have also on the rise, leading SEC Chairman Gary Gensler to say the SEC would combat “bad actors” in all areas of finance, adding crypto to investors.