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Monday, March 20, 2023

Bitcoin price shoots as new bank rule recognises Crypto

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Bitcoin has been formally recognised as an asset class by the Basel Committee, the regulator of international banking standards, with a proposal to introduce capital rules for cryptocurrency.

The price of bitcoin received an immediate boost following the news, shooting up by around $2,000 after the announcement was made.

The global banking regulator categorised bitcoin as a high-risk asset, proposing a risk weight of 1,250 per cent, but it marks another major milestone for bitcoin into the world of traditional finance.

The proposal, published on Thursday, makes a distinction between cryptocurrencies – like bitcoin and Ethereum (ether) – and so-called stablecoins like Tether which, are backed by fiat reserves like the US Dollar.

While banks’ exposure 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 specified prudential treatment,” the Basel Committee stated.

“Given the rapidly evolving nature of this asset class, the Committee believes that policy development for cryptoasset exposure is likely to involve more than one consultation.”

The news comes just one day after El Salvador became the first country in the world to formally recognise bitcoin as legal tender.

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