Basel Committee considers stablecoins less risky than Bitcoin
The Basel Committee on Banking Supervision (BCBS) has proposed that stablecoins be considered less risky cryptocurrencies. According to the document, the BCBS proposes to change the criteria so that stablecoins can be considered less risky than fiat cryptocurrencies such as Bitcoin (BTC). BCBS has so far taken a hard stance on cryptocurrency, recommending a maximum possible risk weight of 1,250% for publicly traded digital assets such as Bitcoin. This means banks must issue capital to match their risks. Banks are also not allowed to allocate more than 2% of their core capital to these riskier assets. However, cryptocurrencies with “effective stabilization mechanisms,” such as stablecoins , are eligible for “preferential Group 1b regulatory treatment.” This means that stablecoins could be subject to “capital requirements based on underlying risk weights as set out in the existing Basel standards framework,” instead of the more stringent requirements set for BTC and altcoins. ...