Basel Standards are international banking regulations developed to strengthen financial stability. These standards, issued by the Basel Committee on Banking Supervision, establish capital adequacy requirements, risk management frameworks, and supervisory guidelines for banks worldwide. Their primary aim is to ensure banks hold sufficient capital to withstand financial shocks and mitigate various risks, including credit, operational, and market risks. The framework promotes consistency in banking regulation across different jurisdictions.
Context
Basel Standards are currently being adapted to address the increasing exposure of traditional financial institutions to digital assets, posing new considerations for risk weighting and capital allocation. A significant debate involves how to appropriately categorize and risk-manage crypto holdings within existing regulatory structures. Future revisions are expected to provide clearer stipulations for banks engaging with cryptocurrencies and blockchain technology, ensuring systemic stability.
The White House framework mandates a function-based asset taxonomy and regulatory coordination, ending the prior enforcement-only compliance uncertainty.
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