New banking rules restrict and recognize encryption

New banking rules restrict and recognize encryption

Source www.ft.com The Basel committee has limited power. It has done what it can in the face of inaction by governments and differing views on the crypto market, even within the same regulatory bodies. It is now time for more coherent policy: whether hazard or haven, crypto is here to stay.

Central bank digital currencies, a burgeoning area of interest, will not be captured by the new requirements. Stablecoins, pegged to a fiat currency, would be given more lenient treatment, with one important caveat: banks must guarantee that the coins are fully reserved at all times. This is no mean feat when one considers that tether, one of the most well known stablecoins, was accused by the New York attorney-general earlier this year of lying that it was always fully backed by the US dollar (it agreed to pay a penalty without admitting wrongdoing). More likely, such checks will not be worth the candle for banks — which is the point. The committee proposed banks would have to hold the same amount of capital as the exposure they face in crypto, so a $100 exposure would result in a $100 capital requirement. This is a manifestation of a longstanding warning by regulators that investors — and now banks — should only hold crypto if they can afford to write off their entire investment. The rules rightly make banks’ shareholders rather than depositors shoulder the risk.

There is an irony to crypto being recognised as part of the established financial system when it was created as an anti-establishment snub. There are elements of traditional finance that can be improved, and certain crypto assets may help. Easing cross-border settlement and payments is one such area. Not entirely coincidentally, a second and welcome announcement from Basel revealed that together with the national banks of France and Switzerland, it will work on a wholesale settlement system using CBDCs. Rather than regulating crypto assets themselves — which is not in the Basel Committee’s gift — the banking supervisors sought instead to tighten rules for regulated lenders increasingly dipping their toes into crypto’s murky waters. For now, that means offering research or facilitating client trading rather than banks’ own proprietary trading of crypto. The proposed rules essentially act as a disincentive to prop trading or buying crypto for clients, which would bring the assets on to banks’ balance sheets.

The News Highlights

  • New banking rules restrict and recognize encryption
  • Check the latest News news updates and information about business, finance and more.
Disclaimer: If you need to edit or update this news from compsmag then kindly contact us Learn more

For Latest News Follow us on Google News


Latest Headlines
  • Show all
  • Trending News
  • Popular By week
Johnson to postpone easing the blockade in England by a month

Johnson to postpone easing the blockade in England by a month

One ally of Johnson said: “Irreversibility is driving Boris’ thinking. He doesn’t want to have to ease restrictions now to bring them back later.” Whitty told ...
Laptops, Desktops, Tablets on the Minnesota Computer Contract from Nor-Tech

After being fired, a man from Middletown was sentenced to house detention for hacking into an IT system

The medical center terminated Delgado’s employment in August 2017. Following that termination, Delgado was no longer authorized to access the medical ...
State Street creates digital finance unit to support cryptographic assets

State Street creates digital finance unit to support cryptographic assets

For reprint and licensing requests for this article, click here Tony Bisegna, currently global head of portfolio solutions, FX sales and trading, and ...
Riverside Health to build new hospital in Isle of Wight county

Riverside Health to build new hospital in Isle of Wight county

Source Riverside Health System has more than 700 physicians in over 75 locations throughout the region. 50 beds – including 34 medical/surgical beds,10 ICU ...
Faceoff bewteen Apple MacBook Pro & Microsoft Surface Laptop 4

Apple’s Missing MacBook Pro, Adobe’s ARM Adventure, and iPhone’s Powerful Update

Apple Loop is here to remind you of a few of the very many discussions that have happened around Apple over the last seven days (and you can read my weekly ...
How technology opened up the financial sector

How technology opened up the financial sector

“Nubank was started out of this place of outrage, right?” Junqueira says. “Here in Latin America, especially in Brazil, we got used to paying some of the ...
The release is coming to the Nintendo switch

The release is coming to the Nintendo switch

Source “It is amazing to see how much involvement and influence gamers worldwide can have on game development. The overwhelming feedback and fan reaction ...
Record Store Day 2021 offers a sign of hope for companies working on their recovery from the pandemic

Record Store Day 2021 offers a sign of hope for companies working on their recovery from the pandemic

Last year, vinyl sales outpaced CD sales for the first time since the 1980s. Vinyl sales grew by 46% to 27.5 million copies sold in 2020, MRC Data told CNN. ...
The best video game subscription deals April 2021

Shopify has hired a team from Primer, an augmented reality home design software – TechCrunch

In a blog post, co-founders Adam Debreczeni and Russ Maschmeyer write that Primer’s app and services will be shutting down next month as part of the deal. ...
Test, error and what I learned about money in my 20s |  personal finances

Test, error and what I learned about money in my 20s | personal finances

Sacramento, California, certified financial planner Pam Rodriguez suggests identifying what brings you joy, then crafting a financial plan to create more of ...
Show next
Compsmag - Latest News from tech, business and health
Logo