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The Basel Committee on Banking Supervision (BCBS) plans to introduce a "new" cryptoasset class by allowing banks to retain up to 1% of their reserves in cryptocurrencies.

BCBS issued its second consultation in its advisory paper issued on June 30th and established a ceiling of 1% of Tier 1 capital after dividing the cryptoasset class in two groups. The limit will apply to unbacked cryptocurrencies such as Bitcoin as well as assets such as stablecoins pegged to a currency.

  • Group 1 (includes tokenized traditional assets and stablecoins that meet classification conditions) went through minor modifications while still using the same framework.

  • Group 2 refers to the assets that do not meet classification conditions and includes specific tokenized traditional assets (Bitcoin, Ethereum) and stablecoins, as well as unbacked crypto assets.

According to the paper, "a bank's overall exposure to Group 2 crypto assets must not be greater than 1% of the bank's Tier capital at all times," in accordance with the Basel Framework, which encompasses all BCBS rules.

Although holding 0,8% of stablecoins and 0,5% in Bitcoin will breach the 1% ceiling, yet JP Morgan 1% of holding will be valued un billions of USD in bitcoins or a mix of cryptocurrencies.

As reminder, the Basel Committee is the primary global standard setter for the prudential regulation of banks with the purpose of enhancing financial stability. Its secretariat is ensured by the The Bank for International Settlements (BIS) and comprises 45 members from 28 jurisdictions, consisting of central banks and supervision of banking authorities.

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