BIS Finalizes Bitcoin Bank Limits — Bitcoin Magazine

The Bank for Inter­na­tion­al Set­tle­ments’ (BIS) Basel Com­mit­tee on Bank­ing Super­vi­sion has final­ized a pro­posed pol­i­cy that would place a 2% lim­it on banks’ Tier 1 cap­i­tal held in bit­coin. This comes with an endorse­ment from the Group of Cen­tral Bank Gov­er­nors and Heads of Super­vi­sion (GHOS), the over­sight body of the Basel Com­mit­tee, which is the “pri­ma­ry glob­al stan­dard set­ter for the pru­den­tial reg­u­la­tion of banks.”

Investo­pe­dia defines Tier 1 cap­i­tal as “the core cap­i­tal held in a bank’s reserves [that] is used to fund busi­ness activ­i­ties for the bank’s clients. It includes com­mon stock, as well as dis­closed reserves and cer­tain oth­er assets.” 

The pol­i­cy includes bit­coin in its def­i­n­i­tion of Group 2 cryp­to assets, say­ing that “In addi­tion to any tokenised tra­di­tion­al assets and sta­ble­coins that fail the clas­si­fi­ca­tion con­di­tions, Group 2 includes all unbacked cryp­toas­sets.” It lat­er describes that “a bank’s total expo­sure to Group 2 cryp­toas­sets should not gen­er­al­ly be high­er than 1% of the bank’s Tier 1 cap­i­tal and must not exceed 2% of the bank’s Tier 1 capital.”