In its second and latest consultation on cryptocurrencies, the Bank for International Settlements (BIS) allows all member banks a Bitcoin reserve of a maximum of one percent.
BIS allows member banks Bitcoin and Co.
Most recently, the BIS met for the second consultation on the crypto issue. In the end, the organization came to some new decisions. The BIS is considered the central bank of Central banks.
As such, it manages the reserves of its 63 members, all of whom are central banks or other financial institutions. These include the European Central Bank, the Deutsche Bundesbank and the FED.
The result of the talks is that members are allowed, among other things, a reserve in Bitcoin. However, this should in no case account for more than one percent of the total assets of the respective bank.
All the proposals expressed in the report are not yet final, but must first go through further integration processes.
Bitcoin as a bank reserve: is this the breakthrough?
The goal of Bitcoin is to exist completely without official support. In this respect, the use by central banks is not necessary. For BTC, this development may still be beneficial.
On the one hand, Bitcoin adoption can grow as a result, and the influence of institutional money is also increasing – a development that has also proved its downsides in the current bear market.
According to the BIS statement, the
Introduction of a limit that limits the total investment of a bank in group 2 cryptocurrencies to one percent of the core capital.
The BIS essentially distinguishes cryptos into two different groups. Group 1 stands for tokenized classic securities and stablecoins with effective stabilization mechanisms.
An example of this crypto class, the BIS remains guilty. However, it is conceivable that these are stablecoins managed by a central organization. This corresponds, for example, to Tether or the USD Coin.
Group 2 crypto assets are stablecoins without BIS-approved stabilization mechanisms, volatile cryptocurrencies and any other related assets (except CBDCs). This also includes Bitcoin.
While the possibility of a one percent Bitcoin reserve for a classic financial company already sounds like a big agreement, the BIS tends to want to clarify its rejection.
Because: It evaluates cryptocurrencies as unsafe investments. Possible risks are to be kept low by limiting the shares.
The restriction of shares applies not only to BTC, but also to all other group 2 cryptocurrencies.
BIS evaluates crypto as insufficient money
Only on June 7, the BIS published a report in which it is doubted that cryptocurrencies can fulfill the role of money at all.
At that time, smart contract platforms were considered. The analysts noticed: although industry founder Ethereum is still the leader of this sector, fragmentation is increasingly occurring.
Fragmentation means that cryptocurrencies cannot fulfill the social role of money. – BIZ
However, there is no general interoperability during this time. According to the BIS, this is contradictory. Because: for money, a social value plays a major role. Users only use a currency if they believe that it will be accepted by other people.
Remarkably, many crypto users focus on one or more cryptocurrencies, but disregard the rest of the market. Due to the lack of interoperability, it is then not possible for users of different divisions to exchange funds directly.
In addition, cryptocurrencies are a hindrance to the network effect. This means that the popularity of a product increases, the more use it experiences. Other people then join in.
However, many cryptos face problems of network congestion. Conversely, a cryptocurrency will then become less and less usable due to more use.
Picture: Wladyslaw Sojka, www.Sojka.photo
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