The Bank for International Settlements (BIS) has recently released its Prudential Treatment of Cryptoasset exposure report for December 2022. And as per the official statement, they have introduced a new policy that permits banks to now hold 2% of their reserves in cryptocurrencies. The policy will take effect on January 1st, 2025.
The official announcement segregates cryptocurrencies under two groups viz. Group 1 and Group 2. Tokenized traditional assets and digital assets “with effective stabilization mechanisms” are both included in the first category. Whereas, digital assets that “fail to meet any of the classification conditions” are referred to as Group 2 assets.
The document states that a bank’s exposures to Group 2 crypto assets should not exceed 2% of the bank’s Tier 1 capital, within their reserves. This criterion has been specifically mentioned under the reserves section of the report. And, with this new development, financial institutions will now be able to venture into different cryptocurrencies and in turn, grow their reserves.
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