Definition ∞ Group 2 Cryptoassets is a classification used by regulatory bodies, notably the Basel Committee on Banking Supervision, to categorize certain digital assets based on their risk profile and underlying technology. This group typically includes cryptocurrencies that do not meet the stringent classification requirements for Group 1, which are considered lower risk. These assets often exhibit higher price volatility or possess less robust governance and operational frameworks. Their classification influences how financial institutions must hold capital against them.
Context ∞ The distinction of Group 2 Cryptoassets is crucial for banks and other regulated financial institutions seeking to engage with digital asset markets, impacting their capital requirements. Regulatory discussions currently focus on refining these classification criteria and developing appropriate prudential treatments for these higher-risk assets. Future policy adjustments will aim to provide clearer guidance for institutions navigating the evolving digital asset landscape, promoting risk management.
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