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US and European Banks Oppose Basel Cryptocurrency Investment Rules

JP Morgan, Deutsche Bank and other financial institutions believe that the new requirements exclude banks from participating in cryptoasset markets and prevent them from storing cryptocurrencies.

Recall that in June 2021, the Basel Committee on Banking Supervision of the Bank for International Settlements (BIS) established a rule according to which banking organizations that have cryptocurrency assets on their balance sheets are required to ensure their 100% reserve.

The Basel Committee adheres to the position that when banks invest in digital assets, the latter should apply a “conservative approach”, since these assets pose a potential threat to the financial stability of a credit institution.

Three months after the recommendations of the Basel Committee were issued, the Association of Global Financial Markets has protested against the application of a conservative approach when investing in cryptocurrency. The objections were supported by major financial institutions, including JP Morgan Chase and Deutsche Bank.

“We believe that the proposals [Базельского комитета] so conservative and simplistic that they, in fact, exclude the bank’s participation in the cryptoasset markets, ”the association said in a letter to the Basel Committee.

The members of the association believe that Basel’s proposed rules for investing in cryptocurrencies demonstrate an attempt by regulators to stop, or at least deprive banking institutions of any incentive to unleash their financial potential. Moreover, the proposed rules are counterproductive because they not only prevent banks from storing cryptocurrencies, but also push these assets out of the regulated sector of the financial system.

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