Basel Committee on Banking Supervision to Release a Banking Framework Dealing with Crypto
The Basel Committee on Banking Supervision (BCBS), a global banking regulator including a number of central banks across the world, is setting up a framework to guide banks on the prudent treatment of cryptocurrency and digital assets. The proposed paper will cover banks which deal in crypto providing details on how much the capital lenders should set aside given the risks involved in crypto.
BCBS Releases Paper on the Risks Posed by Digital Assets in Banks
A published post on the Business Reporter confirms that the Committee (BCBS) is set to produce an article on the involvement and usage of crypto assets. The committee coming from a meeting in Madrid highlighted the risks associated with cryptocurrency when dealing with crypto assets. The committee urged banks to be extra careful and always on the lookout when dealing with crypto assets.
The organization also seeks to gather the views of various major players in the cryptocurrency sphere concerning the judicious treatment of crypto assets. All this is amid the ongoing initiatives in the crypto industry.
BCBS is engaged in bringing policy and supervisory initiatives related to crypto-assets. The committee is planning to look into the dependence of financial institutions on unsupervised 3rd parties, and with the final consultation paper on the same expected later in January 2022. Some of these services are data and cloud computing.
The BCBS was started by the central bank governors of 10 countries back in the early seventies. It is a group of almost 50 banking manager's that oversee 28 jurisdictions.
A Long Walk to Regulation by Basel Committee
The journey towards regulation by the global banking authority on banks dealing with crypto has been long and tough. In March, the commission released a statement warning the banks against facilitating Bitcoin payments as it poses a financial risk to the banking system.
In October, at the G20 summit, a conference where BCBS members pledged to discuss crypto at length, the world leaders praised the launch of stablecoins in enhancing the traditional finance system but were against Libra saying the token may pose a financial threat to the global system.