Basel Committee Calls for Crypto Regulation
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Dec. 16, 2019
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The Basel Committee on Banking Supervision, a unit of the Bank for International Settlements (BIS) made up of regulators from around the world, has recently published a document calling for a prudent regulation of cryptocurrencies and stablecoins because of the risks they can pose to the traditional banking system and global financial stability in general. According to the committee:

"If banks are authorized, and decide, to acquire crypto-assets or provide related services, the Committee is of the view that they should apply a conservative prudential treatment to such exposures, especially for high-risk crypto-assets."

According to the committee, cryptocurrencies, which can offer investors both direct (owning them directly) and indirect (through derivatives) exposure, should be regulated according to capital and liquidity requirements.

While the committee recognizes banks' current exposure to cryptos is limited, it is obvious that the size of the market is significant and it is necessary to implement a solid regulation.

This is not the first time the bank talks about cryptocurrencies. The bank warned in March banks about the risks associated to cryptocurrencies, including liquidity risks, credit risks and money laundering.

The committee then stated cryptoassets, which may have the same risks and economic functions as traditional assets, should not be treated differently, which is why it is necessary to regulate them with the same standards as traditional assets.

If the committee decides to go ahead with the proposal, it shall be applied by all internationally active banks. Those interested in taking part in the discussion of the proposal have until March 13 to express their opinion and make all contributions they wish.

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