It is a rare event that unites bitcoin believers and crypto critics. But both largely welcomed the news from the global rulemaker for big banks that it plans to apply the most punitive capital rules to lenders that hold crypto assets. It is plainly right to do so. Its action must be matched by co-ordinated policy around the world to make safer an asset whose popularity seems destined to keep growing, despite the risks that crypto finances organised crime and terrorism. Crypto’s volatility imperils increasing numbers of retail investors, not to mention posing credit risks for lenders.
The value of bitcoin, which accounts for roughly half the $2tn crypto market, rose by as much as $2,000 on Thursday’s announcement by the Basel Committee on Banking Supervision, fuelled by the notion that regulation, rather than an outright ban, was official recognition of an asset class that has now come of age. Either way, a $5,000 rise since Tuesday, spurred also by El Salvador becoming the first country to adopt bitcoin as legal tender, highlighted the committee’s point about volatility. Bitcoin has ricocheted from under $30,000 to over $60,000 this year, before crashing back to about $37,000.
Rather than regulating crypto assets themselves — which is not in the Basel Committee’s gift — the banking supervisors sought instead to tighten rules for regulated lenders increasingly dipping their toes into crypto’s murky waters. For now, that means offering research or facilitating client trading rather than banks’ own proprietary trading of crypto
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https://www.ft.com/content/ef08ed0a-20a5-471c-9455-4909c1d546dc
