Impact of Basel 3 on Bitcoin

[brainactive]

According to the update to Basel 3, physical gold is now a tier 1 asset, which means that it is essentially treated as "risk-free".

Seems like this increases the attractiveness of physical gold relative to bitcoin as a reserve asset, particularly for institutions. How much of an impact do you think this will this have for institutional interest in Bitcoin going forward?

[mk4]

Meh. It's not like because gold was suddenly named as a "tier 1 asset", that investors worldwide would suddenly go "omg gold is tier 1! I must invest now!" or something. My guess that this is going to pretty much amount to nothing.

Calling gold or any asset a "zero risk asset" sounds pretty BS to me though. I'm a bitcoin bull, and I wouldn't even call bitcoin that.

[brainactive]

Meh. It's not like because gold was suddenly named as a "tier 1 asset", that investors worldwide would suddenly go "omg gold is tier 1! I must invest now!" or something. My guess that this is going to pretty much amount to nothing.

Calling gold or any asset a "zero risk asset" sounds pretty BS to me though. I'm a bitcoin bull, and I wouldn't even call bitcoin that.

I'm not an expert in the banking sector, but my understanding of Basel 3 update is that it's not just a name change. Banks are required to hold capital depending on what types of asset they hold. The riskier the assets that a bank has (in other words, the lower the tier as defined by Basel 3), the more capital is required to be held.

The fact that physical gold is now considered a tier 1 asset means that a bank does not need to hold capital in order to hold gold. To me this seems like quite a big deal as there is now more incentive for banks to load up on gold (and therefore making bitcoin less attractive).

[mk4]

I'm not an expert in the banking sector, but my understanding of Basel 3 update is that it's not just a name change. Banks are required to hold capital depending on what types of asset they hold. The riskier the assets that a bank has (in other words, the lower the tier as defined by Basel 3), the more capital is required to be held.

The fact that physical gold is now considered a tier 1 asset means that a bank does not need to hold capital in order to hold gold. To me this seems like quite a big deal as there is now more incentive for banks to load up on gold (and therefore making bitcoin less attractive).

Huh. Based on this article[1], you seem to be right. Correct me if I'm wrong though, but this pretty much just means that banks can increase their allocation to gold if they wanted to. It's not like it would make banks more or less bullish both on gold or bitcoin. They can still buy bitcoin if they actually wanted to.

^But then again, just my opinion. I don't know that much about banking either.

[1] https://metal.digital/articles/basel-iii

[NeuroticFish]

Seems like this increases the attractiveness of physical gold relative to bitcoin as a reserve asset, particularly for institutions.

I'm not familiar with this, but I think that you're correct.

How much of an impact do you think this will this have for institutional interest in Bitcoin going forward?

No impact at all. This will impact only those who use certain reserve assets only because they're required by the law.
Bitcoin is for those more open minded and with appetite for a bit of risk too, who want a reserve asset they can have gains from and can easily HODL.

Banks' interest towards Bitcoin was only to get/keep their customers, they will keep using gold as reserve asset.
Corporations on the other hand, will be diversified in basically everything, from gold to stocks and from bonds to Bitcoin. They afford a certain degree of risk and their "expansion" in the crypto markets won't be hindered by re-classification of (the same old) gold.

[buwaytress]

Meh. It's not like because gold was suddenly named as a "tier 1 asset", that investors worldwide would suddenly go "omg gold is tier 1! I must invest now!" or something. My guess that this is going to pretty much amount to nothing.

Calling gold or any asset a "zero risk asset" sounds pretty BS to me though. I'm a bitcoin bull, and I wouldn't even call bitcoin that.

Tier-1 anything is just marketing speak, definitely amounts to nothing. You could even downgrade gold to Tier 10 and people wouldn't budge from their gold either.

Zero-risk. Ah, such famous last words for many a business, speculator, even government who's ever deigned to describe a currency or asset they were backing.

[masterrex]

IMHO, I think it has no big impact on the Bitcoin side when it comes to that Basel 3 update. Because Gold is already an old asset that's why it has its own function's as a stable asset for a long time. so there's nothing new about it. While Bitcoin is different than Gold, it has no physical form that's why it was easy to carry anytime, anywhere via a hardware wallet or even a smartphone. while physical Gold is not, (otherwise it was a digital Gold? but on the other side, because Gold is more stable than Bitcoin that's why it is suitable for reserve purposes. while Bitcoin is not, due to its price volatility. But overall Bitcoin is a very attractive asset for the risk-takers and we cannot deny that because many investors love it.   

[dkbit98]

Most people don't even know what Basel 3 even is so it's better to write small introduction explanation before you are asking other people about their opinions.
Basel standard is a global banking regulatory framework that was developed after financial crisis of 2007 and 2008 and it is inly used to benefit bankers.
It is normal to think that any other asset like gold, silver or Bitcoin will be popular in time of inflation than fiat currency but they are manipulating and controlling gold prices a lot, that is something they can't do so easy for Bitcoin.
Main thing they wan is CONTROL and they can't have that with Bitcoin, so I don't think Basel 3 or any other standard will have any negative effect on Bitcoin, and in long run Bitcoin beats everything.