Global banking regulator Basel Committee on Cyberbanking Supervision (BCBS) calls for a conservative prudential handling framework for crypto assets.

The Basel Committee — which includes banking regulators from the Usa, Europe and Nippon — published its report on the prudential treatment of crypto assets. The study was first announced in Nov, as Cointelegraph reported at the time.

In the document, the regulator claims that the growth of cryptocurrencies and related services can negatively affect financial stability and increase the risks faced by banks. The study reads:

"Crypto-assets are an immature asset class given the lack of standardisation and constant evolution. Sure crypto-assets have exhibited a loftier degree of volatility, and present risks for banks, including liquidity risk; credit risk; market risk; operational run a risk (including fraud and cyber risks); money laundering and terrorist financing take a chance; and legal and reputation risks."

"Bourgeois prudential treatment" advised

Furthermore, BCBS expresses the idea that — if authorized — banks that decide to larn crypto avails or provide related services should use prudence, especially for high-risk tokens. The document also specifies that exposure to cryptocurrency can exist direct when the banking company holds the avails or indirect when, for instance, the bank owns crypto derivatives.

The Basel Committee recommends that crypto assets should not be accepted as credit risk mitigation collateral, high-quality liquid avails for liquidity coverage ratio or net stable funding ratio. Furthermore, according to the regulator, crypto avails held in the trading book should be subject to a total deduction for market gamble and credit valuation. The paper reads:

"This treatment reflects the loftier degree of uncertainty almost the positive realisable value of crypto-assets in times of stress."

The paper specifies that central bank digital currencies are outside its scope and that stablecoins "warrant further assessment and elaboration before specifying a prudential treatment."

The BCBS is a commission of cyberbanking supervisory government that was established by the central bank governors of the Group of Ten countries in 1974.

The Basel Committee has long shown that it is wary of crypto assets. As Cointelegraph reported in March, at the fourth dimension the regulator issued a alarm statement on cryptocurrencies.