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Basel Committee to revise crypto asset rules

Cryptocurrencies2The influential Basel Committee on Banking Supervision has agreed to revisit its proposed capital rules on crypto assets in reaction to criticism from market participants.

The Committee, part of the Bank of International Settlements and responsible for setting the capital adequacy rules for financial institutions, issued its proposals in June.

They required firms investing in crypto assets such as bitcoin should set aside capital equivalent to their holdings – a ruling that would place crypto assets in the highest risk category.

However the proposals were criticised by a number of major banks and associations as overly conservative and effectively making its economically prohibitive for banks and other mainstream participants to get involved in crypto assets.

A joint letter from the Global Financial Markets Association, Financial Services Forum, the Futures Industry Association, the Institution of International Finance, the International Swaps and Derivatives Association, and the Chamber of Digital Commerce called for a revision of the plans.

The committee has agreed to “further specify” its capital requirement and issue a new consultative document in mid-2022.

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