Bitcoin peeps above $38k on basel news
|Bitcoin hit highs above $38,000 on Thursday after the Basel Committee’s proposal gave banks a green light to hold the leading cryptocurrency and other digital assets.
-
The top cryptocurrency hit a high of $38,461 during the European hours, extending Wednesday's double-digit rally to above $37,500, according to CoinDesk 20 data.
-
The Basel Committee on Banking Supervision, which sets international banking standards, recommended stricter capital requirements for holding bitcoin (BTC, +7.28%) than stocks and bonds.
-
The committee proposed a risk weight of 1,250% for bitcoin, ether (ETH, -0.42%), and all other cryptocurrencies, excluding stablecoins that are fully backed by reserves.
-
It means a bank would require to hold capital equivalent to the face value of the bitcoin exposure.
-
"A $100 exposure would give rise to risk-weighted assets of $1250, which when multiplied by the minimum capital requirement of 8% results in a minimum capital requirement of $100 (ie the same value of the original exposure, as 12.5 is reciprocal of 0.08)," the proposal said.
-
While Basel has categorized bitcoin as a high-risk asset, bitcoin's reaction suggests the market was likely expecting worse.
-
As cryptocurrencies begin to make their way into the traditional financial ecosystem, it is only normal to expect various regulatory bodies to begin to set and then also try to coordinate regulatory initiatives to protect savers and investors," Denis Vinokourov, head of research at Synergia Capital said.
-
"Risk is over-regulation, but equally lack of regulation will also prevent further adoption en masse. Basel's proposal to split assets into groups makes logical sense given the different volatility and risk parameters," Vinokourov added.
-
The recommendation comes as regulators across the globe are stepping up plans to regulate the still-nascent market.
-
On Wednesday, China stepped up its crackdown on bitcoin, asking miners based in Qinghai province to shut down operations.
Bitcoin's 15-minute price chart
Source: TradingView
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.