Bank for International Settlements will allow 1% Bitcoin reserves

Despite its scepticism about digital currencies, which was increased by the recent cryptocurrency market fall, it seems that the Bank for International Settlements (BIS) will allow banks to keep up to 1 percent of their reserves in cryptocurrencies such as Bitcoin (BTC).

In its consultative paper titled “Second discussion on the prudential treatment of crypto-assets,” issued on June 30th, the Basel Committee on Banking Supervision (BCBS) of the BIS has proposed restricting banks’ total exposures to “Group 2 crypto assets to 1 percent of Tier 1 capital.”

Group 2 consists of tokenized conventional assets and stablecoins, as well as unbacked crypto assets, which do not fit the categorization criteria. Unlike Group 2, Group 1 consists of tokenized conventional assets and stablecoins that fulfil categorization requirements.

As stated in the document: “The exposures of banks to Group 2 crypto-assets are subject to a level of exposure. Banks must apply the exposure limit to their overall exposures to Group 2 crypto assets, including both direct and indirect holdings.

A scepticism toward crypto

Notably, Finbold previously revealed that the BIS used the current fall of the cryptocurrency market to reaffirm its scepticism about the asset class and to warn about the realisation of its forecasts regarding the hazards of decentralised finance (DeFi).

In addition, the global central bank body issued a bulletin in early June stating that “crypto cannot fulfil the social role of money” and listing a number of problems it regarded in the crypto and blockchain industries, such as high fees and network congestion that result in the fragmentation of the landscape.

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