A new milestone for the cryptocurrency industry is the decision to set a global standard that will allow banks to have exposure to cryptocurrency assets.

The standard has been approved at the highest level, namely by the Group of Central Bank Governors and Heads of Supervision (GHOS) of the Bank for International Settlements (BIS).

Under the standard, banks will be allowed to hold up to 2% of cryptocurrencies in their reserves. The implementation starts on 1 January 2025.

The report, dubbed “Prudential treatment of cryptoasset exposures,” introduces the final standard structure for banks on exposure to digital assets, including traditional assets, fixed currencies, and unsupported cryptocurrencies, as well as feedback from stakeholders following a consultation launched in June.

The Basel Committee on Banking Supervision noted that the report will soon be incorporated as a new chapter in the Basel Consolidated Framework.

To mitigate risks

The BIS statement highlights that the global banking system’s direct exposure to digital assets remains relatively low, but recent developments have highlighted “the importance of having a robust minimum framework for internationally active banks to mitigate risks.”

The report also said:

“Unsupported cryptocurrencies and stable currencies with ineffective stabilization mechanisms will be subject to conservative prudential treatment. The standard would provide a robust and prudent global regulatory framework for internationally active banks’ cryptocurrency exposures that promotes responsible innovation while maintaining financial stability.”

Pablo Hernández de Cos, Chairman of the Basel Committee and Governor of the Bank of Spain, noted of the standard:

“The Commission’s cryptocurrency standard is a further example of our commitment, willingness and ability to act in a globally coordinated manner to mitigate emerging financial stability risks.”

The Commission’s 2023–24 Work Programme, adopted today by GHOS, seeks to further strengthen the regulation, supervision, and practices of banks globally. In particular, it focuses on emerging risks, digitalization, climate-related financial risks, and the monitoring and implementation of Basel III.”

Pilot Programme for the Digital Coins of the Central Banks

The BIS revealed in September the results of the multinational central bank digital currency (CBDC) pilot, following a one-month trial phase that enabled $22 million worth of cross-border transactions.

The pilot involved the central banks of Hong Kong, Thailand, China, and the United Arab Emirates, as well as 20 commercial banks from these regions. According to a BIS report published in June, about 90% of central banks are considering adopting CBDCs.