The Basel Committee on Banking Supervision (BCBS) has proposed to consider stablecoins as less risky cryptocurrencies.
According to the document, BCBS proposes changing the criteria so that stablecoins can be considered less risky than fiat cryptocurrencies such as Bitcoin (BTC).
BCBS has so far taken a hard line on cryptocurrencies, recommending a maximum risk weight of 1,250% for publicly traded digital assets such as Bitcoin. This means that banks must issue capital commensurate with their risk. Additionally, banks cannot allocate more than 2% of their core capital to these risky assets.
However, cryptocurrencies with “effective stabilization mechanisms,” such as stablecoins, may receive “preferential Group 1b regulatory treatment.”
This means that stablecoins may be subject to “capital requirements based on the underlying risk weights specified in the existing Basel standard framework” instead of the more stringent requirements set for BTC and altcoins.
“Group 1 cryptocurrencies (stablecoins) are subject to capital requirements based on the risk weighting of the underlying exposures specified in the existing Basel framework.”
BCBS Report
Last October, the Basel Committee on Banking Supervision proposed mandatory reporting requirements for banks involved in cryptocurrency activities. According to the financial institution, the proposal addresses both qualitative and quantitative aspects of cryptocurrency risk.
The disclosure will include information about the bank’s cryptocurrency-related activities, details of its cryptocurrency exposure and related liquidity requirements. The Commission plans to implement these disclosure requirements by January 1, 2025.