The Bank of International Settlements (BIS) is considering cryptocurrency exposure protocols.
The international banking organization seeks input from stakeholders on the appropriate course of action for banks dealing with crypto assets. Legacy financial gatekeepers, from central banks and other regulators to international working parties, appear to be paying more attention to the developing bitcoin industry.
Consultation with the Public on Crypto Assets
The Basel Committee is focusing on cryptocurrencies, according to a communiqué released by the Bank for International Settlements (BIS) on Monday (June 7, 2021). Amid the continuing COVID-19 outbreak, the move is part of a more considerable post-crisis investigation.
The Basel Committee, the leading worldwide standard on banking regulation and oversight, decided to undertake a public consultation on cryptocurrencies as part of its crypto-related preparations.
According to the BIS news release, the purpose of the public consultation is to determine suitable methods for banks’ crypto exposure. The financial industry has had minimal involvement with virtual currencies, according to the Basel Committee.
After years of ignoring crypto, some banks and financial institutions are now pushing increased contact with Bitcoin and crypto assets in general. Banks expand their presence in the cryptocurrency space by running trading desks, selling financial products, and even providing custody.
The Basel Committee’s earlier communication in December 2019 disclosed intent to establish a prudential treatment for crypto assets, and Monday’s press release builds on that. According to the release, the consultation document from its prior considerations and interactions with industry stakeholders will be released later in the week.
The Committee sees the need to develop guidelines for banks’ exposure to crypto-assets due to the need to safeguard global financial stability and the potential threats that cryptocurrencies represent to the banking system.
Virtual Currencies are no longer ignored by traditional finance
Stefan Ingves, the governor of Sweden’s central bank, declared earlier this month that Bitcoin, and by extension, the crypto market, was too huge to be unregulated. Indeed, both national and international authorities are working quickly to create legislation governing market activities.
The US Office of the Comptroller of Currency has announced intentions to examine its cryptocurrency standards, as previously reported. The EU Commission is working on a law called Markets in Crypto Assets (MiCA) that will be ratified across the EU.