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The organisation has previously warned of “financial stability concerns” and the risks that banks face when dealing with cryptocurrency.
The Basel Committee on Banking Supervision has announced the publication of a consultation document targeted at minimising banks’ risk of exposure to cryptocurrency.
According to the Switzerland-based Bank of International Settlements, or BIS, the Basel Committee will publish the paper on crypto exposure this week following its decision to hold a public consultation on the matter. The announcement came during a Friday meeting, during which the committee also discussed the impact of the current pandemic on the banking system as well as any proposed policy initiatives:
“While banks’ exposures to cryptoassets are currently limited, the continued growth and innovation in cryptoassets and related services, coupled with the heightened interest of some banks, could increase global financial stability concerns and risks to the banking system in the absence of a specified prudential treatment.”
The BIS further stated that, while many authorities seek the Basel Committee’s permission, the regulator relies on its members to enforce suggested steps. In other words, the committee’s conclusions do not have legal power. The organisation includes banking regulators from Japan, the United States, and numerous European countries.
The committee’s repeated need for “prudential treatment” of cryptocurrency has been a recurring topic. The regulator stated in 2019 that cryptocurrencies were “unsafe to rely on” as a means of exchange or store of wealth.