Swiss committee proposes banks hold a dollar for every dollar in Bitcoin exposure
The Swiss Financial Market Supervisory Authority (FINMA) has suggested that banks conduct due diligence on their customers’ cryptocurrency holdings, as well as monitor customers’ spending, in a bid to prevent money laundering and terrorism financing. The proposal, which is currently under consideration, was submitted by FINMA governor, Home-Sec. Yves Mersch.
Experts on the Financial Stability Board have proposed that all banks must have a minimum amount of Bitcoin exposure in order to operate in a eurozone country. This will be a titanic task for banks, who have a record of massive losses in the cryptocurrency world.
The Financial Stability Board (FSB), the international body that monitors global financial stability, recently established new guidelines for regulating the cryptocurrency and blockchain industry. The FSB proposed to set up a “buffer” of one trillion Swiss francs (CHF) to guarantee the solvency of the country’s banks. This one trillion is equivalent to the maximum exposure to Bitcoin among the Swiss banks.. Read more about bank cryptocurrency and let us know what you think.
Swiss committee proposes that banks withhold one dollar for every dollar invested in bitcoin Earn up to 12% annual returns on Bitcoin, Ethereum, USD, EUR, GBP, Stablecoins, etc. Beginning of importance Bitcoin ‘ Switzerland ‘ Regulations Banks will have to meet the strictest requirements if they want to trade in cryptocurrencies. Shaurya Malwa – 10. June 2021 at 11:56 UTC – 1 min read Regulators in Basel said today that banks are most at risk from bitcoin and other cryptocurrencies because they are a means of money laundering and pose a threat to the broader financial market. * BITCOIN IS RANKED AS THE HIGHEST RISK IN THE BANK’S CAPITAL PROPOSAL. – *Walter Bloomberg (@DeItaone) June 10, 2021 The rise of crypto assets and related services is likely to raise concerns for financial stability and increase risks for banks, according to the Basel Committee, which includes the Federal Reserve and the European Central Bank. He added: The capital will be sufficient to fully amortize the risks associated with crypto assets without exposing depositors and other senior bank creditors to losses.
What does this mean for Bitcoin?
The committee proposed applying a 1 250% risk weight to the bank’s exposure to bitcoin and other cryptocurrencies. Risk-weighted assets are the bank’s off-balance sheet assets or positions weighted by the potential risk to which the bank is exposed in the event of a problem. This calculation is used to determine a financial institution’s capital requirements for each asset or investment it holds. This means that banks will have a dollar of capital for every dollar of bitcoin value they hold or store, based on the 8% minimum capital requirement cited by Bloomberg. Capital requirements for different types of cryptocurrencies will differ. Tokens backed by or linked to real assets are likely to require less capital. The public can comment on the proposal before it goes into effect, and the committee can change the policy as the market matures.
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As bitcoin continues its meteoric rise, the Swiss government is taking steps to ensure that the country’s financial system does not become a target for hackers who might want to steal the cryptocurrency. The move comes amid a growing debate about how to handle the huge and still largely unregulated digital currency.. Read more about swiss cryptocurrency and let us know what you think.
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