Definition ∞ RAA Codes refer to specific risk assessment and allocation codes used within financial regulatory frameworks. These codes classify different types of assets or exposures based on their associated risk levels. Financial institutions then apply these codes to determine the appropriate capital reserves required against those assets. The primary purpose is to ensure that institutions maintain sufficient buffers to absorb potential losses. They are tools for standardized risk measurement.
Context ∞ In the context of digital assets, the development of specific RAA codes is a crucial regulatory undertaking to standardize how banks and other financial entities account for crypto holdings. News often discusses the challenge of assigning appropriate risk weightings to volatile and novel digital assets, which currently often incur very high capital charges. Establishing precise RAA codes for cryptoassets could provide clarity, influence institutional adoption, and ensure a more consistent approach to managing digital asset risk across the financial system.
Blockchain Knowledge
Cryptocurrency Foundation
Cryptospace Newsfeed
