The Bank for International Settlements (BIS) decided to grant commercial banks to officially hold bitcoin.
BIS plans to capitalize on the popularity of Bitcoin (BTC) despite the market being bearish for the past few weeks and has approved banks to hold up to 1% of reserves in Bitcoin.
On June 30, BIS’s Basel Committee on Banking Supervision (BCBS) produced a consultative document. The document titled “Second consultation on the prudential treatment of crypto asset exposures” limited the total exposure that the above-mentioned banks have to “Group 2 crypto assets to 1% of Tier 1 capital.”
Group 2 includes those assets that “do not meet classification conditions” like Bitcoin while Group 1 includes tokenized traditional assets (Group 1a) and stablecoins (Group 2a).
“Banks’ exposures to Group 2 cryptoassets will be subject to an exposure limit. Banks must apply the exposure limit to their aggregate exposures to Group 2 cryptoassets, including both direct holdings (cash and derivatives) and indirect holding (ie those via investment funds, ETF/ETN, special purpose vehicles),” the BIS said in the document.
The documents explains in more detail what the BIS has in mind for banks and bitcoin:
“The large exposure rules of the Basel Framework are not designed to capture large exposures to an asset type, but to individual counterparties or groups of connected counterparties. This would imply, for example, no large exposure limits on cryptoasset where there is no counterparty, such as Bitcoin. The Committee proposes, therefore, to introduce a new exposure limit for all Group 2 cryptoassets outside of the large exposure rules. The Group 2 exposure limit is set out in SCO60.121 to SCO60.124 and has the following features:
• Provisional limit set at 1% of Tier 1 capital, to be reviewed periodically.
• Limit applied jointly to all Group 2 cryptoassets on gross exposures with no netting or recognition
of diversification benefits.
• Measurement of derivative exposures via a delta-equivalent methodology”
A reddit user has summarized the document: “[The BIS sees bitcoin] as a risky asset and if banks choose to hold it they must increase their Tier 1 capital (bank equity). They do distinguish between less risky crypto – for example stablecoins with genuine backing (not Tether) – and more risky like Bitcoin (“unbacked crypto”) with more Tier 1 capital required for more risk.
The framing the BIS tries to establish is to make bitcoin sound risky. The real risk for savers and retail investors is the fragile banking system and the global fiat ponzi itself.
Despite this important reveal, the BIS has been skeptical of Bitcoin for years. A few years ago, the international financial institution suggested that issues related to Bitcoin can be resolved by it moving away from its current Proof of Work (PoW) consensus.
Saifedean Ammous, author of “The Fiat Standard” and “The Bitcoin Standard” has reported on BIS public statements via Twitter:
Inside the bitcoin community, the BIS is considered the final boss and ultimate enemy of bitcoin given the organizations power and influence on global monetary policy and regulatory developments.
At the same time, bitcoin is understood as a technology that cannot be stopped, censored or taken down any more. Just like the internet, bitcoin was designed to resist any major attack and censorship.
The BIS has not just lost its authority over the media narrative, it has also lost complete control over the very global currency markets it aims to usher and direct. With bitcoin, a new paradigm of monetary competition has been set on fire and the fiat money monopoly game is over.
Bill Gates called it “a technological tour the force”. What he meant was that bitcoin could be brought down if enough resources would be gathered. This has been proven to be a hopeless idea.
The BIS is often ascribed as being the final boss of Bitcoin. However, considering the BIS latest directives to let banks keep bitcoin on their balance, observers may already label it a defeat, certainly an arm going down.
Central bankers, central planners and godfathers of money are no longer in charge. The world reserve currency tournament has been won by bitcoin.