Today the Basel Committee on Banking Supervision published a consultation on capital requirements for crypto asset risk exposures. It proposes a 1250% risk weighting for cryptocurrency exposures, discouraging banks from exposing themselves to the risks. Requirements for tokenized conventional assets are not as steep, but stablecoin risk weightings are not as little as one might expect.
Basel III requires banks to set aside additional capital based on the risks they take. Generally, the higher the risk, the higher the return, and Basel aims to reign in that risk appetite.
To put the crypto risk weighting figure in context, holdings in U.S. Treasuries are treated as having 0% risk weighting and the most extreme risks attract 1250%.
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