The Basel Committee on Banking Supervision announced on Thursday that cryptocurrency investments such as Bitcoin will be subjected to the highest capital requirements for holdings as global regulators aim to limit their threat to the stability of the banking sector.
“The growth of crypto-assets and related services has the potential to raise financial stability concerns and increase risks faced by banks,” the Basel Committee announced in a report.
According to the Basel Committee, cryptocurrencies pose dire risks due to the potential for money laundering as well as wild price changes that could lead to defaults. As a result, the panel proposed the application of a 1,250% risk weight to Bitcoin and other virtual currencies.
Such a steep risk rate, as well as an 8% minimum capital requirement, means that banks may need to hold a dollar in capital for each dollar invested in Bitcoin and other cryptocurrencies.
Before any policy is implemented, the above notion will be open to public opinion. The Basel Committee also assured that, if commissioned, the policy may undergo several changes as the crypto market continues to evolve.
