Bank Supervisor Advocate For Prudential Treatment On Crypto

According to the Regulator, any bank that decides to work with crypto-related assets should first ensure it possesses relevant technical expertise.

As at the time of writing this news, the following information was gathered;

The Basel Committee on Banking Supervision has previously warned on financial stability concerns and the dangers faced by banks when dealing with cryptocurrencies.

As a matter of fact, the Basel Committee on Banking Supervision decided to publish a consultative paper to guide banks on the reduction of the fang associated with cryptocurrencies.

According to the Switzer-based Bank of International Settlements or BIS, the decision reached this week to hold public consultation on the guidelines. The decision was reached on Friday during a meeting, in which the committee deliberated on the impact of the current pandemic on the banking system as well as any proposed policy initiatives.

The BIS added that though many seek the approval of the Basel Committee; the regulator depends on its members for the proposed actions to be enforced. In addition, the committee's decisions will not become a law.

Banking Regulators in countries like the United States, Japan and other countries in Europe are also members of the group. The committee's subject is for crypto to experience a "Prudential Treatment".

It was also gathered that earlier in 2019, the regulator had advised that cryptocurrencies were " unsafe to rely on" as a medium of exchange or store of value.

Other important updates from the news include;

The committee has decided that any bank that insists in dealing with crypto-related assets should first ensure that they employ a relevant technical expert in the field of crypto. In addition, the bank should guarantee a clear and effective risk management framework, providing regular and relevant data related to the bank's crypto-asset risk profile. More so the bank should disclose adequate publicity in any crypto-related services along with its usual financial disclosures as well as be compliant with local regulators.

The BiS published a research in January, claiming that departing from Bitcoin's (BTC) proof-of-work system will not solve the major problems faced by the biggest Cryptocurrency.

In contact, the BIS had earlier reported that 70% of global central banks are exploring the benefits of Central Bank Digital Currency (CBDC) issuance, while clear implementation plans and motivations significantly vary depending on contexts.

What are your thoughts on the regulatory plans by the Global Banking Regulator of Switzerland on crypto assets?