Central Banks can hold up to 2% of their reserves in BTC since Jan 1st, 2025

[nullama]

It's already been almost a month since The Bank for International Settlements (BIS) decision that Central Banks can hold up to 2% came into effect under their "Prudential treatment of cryptoasset exposures".

BIS initially was planning for a 1%, but when Central Banks asked for 5%, they proposed a 2% as a compromise.

A bank’s total exposure to Group 2 cryptoassets must not exceed 2% of the bank’s Tier 1 capital and should generally be lower than 1%.

Given that Central Banks are already looking into this, let's examine the impact this could have.

Let's be conservative and assume we continue with the proposed 2%, and not the 5% that banks want.

Banks have about $188T:

The value of bank assets worldwide increased gradually between 2002 and 2023, despite some fluctuation. In 2023, global bank assets amounted to more than 188 trillion U.S. dollars, up from 183.2 trillion U.S. dollars a year earlier.

At 2%, this represents $3.76T in Bitcoin. For comparison, the current market cap of Bitcoin is $2.05T.

This, even at 2%, is a game changer for Bitcoin.

[Lucius]

@franky1 has mentioned it several times in his posts over the past few months, but I haven't noticed that members are too excited about it. People pay more attention to a certain president and his promises, while on the other hand, news like this can have a much greater impact on the price of BTC - although it should be noted here that banks can have part of their assets not exclusively in BTC, but in cryptoassets as is said in the article.

Some will not agree at all with the fact that banks start buying and storing BTC, but it is still their decision and it remains to be seen whether everything will come down to individual cases or whether central banks will start investing en masse in cryptocurrencies.

As things stand right now, this could be a very exciting year for Bitcoin.

[franky1]

for clarification(update d580.pdf):

This document sets out the final revised standard which the Committee has agreed
to implement by 1 January 2026

i can only guess it seems they dont want a rampant buy up session by multiple banks during ATH season and instead wait until the correction season(post ATH)

also
they aim for 1% but can buy(inflow) upto 2% but would be in breach if they buy(inflow) above 2%
when hoarding crypto assets they have a 5% of fiat value of reserve limit before they have to sell(outflow)

also
to note they have 2 groupings. group 1 are stablecoins of trad-fi,  group 2 are well known instable coins and their partnered ETF's, pegged tokens, etc. so the 2% max buys may not be a total of just bitcoin, but a mix of some bitcoin some pegged bitcoin derivative, some altcoins and some ETF

also it appears(im still reading and de-complicating verbage of latest standards) that of the group2(which bitcoin fits within) which has its own 2% and 5% limits of the group, a further limit is implied per asset hidden in the small print. whereby of the 2% of total fiat reserve being group 2inflow limit. within group 2, a 5% of group 2 is a limit of each asset type. 0.1% is equal to 5%per asset type of 2% of group

meaning(example):  
privatekey/multisig(self custody) bitcoin is 0.1% of total fiat reserve
ETF shares of exposure to bitcoin is 0.1% of total fiat reserve
some wrapped coin pegged to bitcoin is 0.1% of total fiat reserve
some altcoin is 0.1% of total fiat reserve
[16 other assets of this class]

so having direct self custody real bitcoin stored by central bank may end up being only 0.1% of fiat reserves

also(still translating jargon to common)
there would be a breach if each asset goes above 0.3% of total fiat reserve

p.s seems the basel committee slid in a limiter in the small print. which seems to be where self custody of real bitcoin would have a inflow of 0.1% of total reserves limit and would require selling(outflow) at 0.3% of total reserves. and so banks would need to also buy etfs pegged tokens and derivatives exposed to bitcoins price to fill the 2% of total reserves

[kryptqnick]

I read about this institution, and it seems important and potentially powerful. It unites central banks of 60 countries, including all major European states, North America, major South American states, China, and India. It seems they've been working on this policy since 2022, and I do agree that even 2% is quite a lot of money (even for cryptos in total) if central banks choose to hold some funds in Bitcoin. Does anyone know whether the decisions by BIS are obligatory or recommendations? If a country whose central bank is a member of the institution wants to exceed the 2% limit, can they do it without leaving the institution or not?

[franky1]

If a country whose central bank is a member of the institution wants to exceed the 2% limit, can they do it without leaving the institution or not?

to avoid breach they would need to increase fiat reserves to balance things out or sell assets to bring within limits

update(reading/de-jargonising latest final docs and smallprint today)
seems the bis basel committee hid a further limit which translates to the 2% buy-in(inflow) limit is of all instable crypto assets combined,
which each individual cryptoasset type within the group also has a limit.. meaning they cant just fill the 2% allowance with just bitcoin

p.s im sure america, uk, eu wont want to be part of the BIS in near future and instead want to set out their own international banking standards committee, seeing as BIS is the committee that is leaning towards offering CBDC and aiding in the BRICS process

[tread93]

Once the banks fully embrace crypto that basically will green light any red light or yellow lights within organizations / governments that are still trying to make these decisions because at that point it will be much easier for them to have custody of these with banking custodial solutions that have been implemented and it will further legitimize Bitcoin as a result as well. Pretty freaking epic when you have every bank trying to get bitcoin on their balance sheet if its not already happening it will soon be. It will have a HUGE impact on our favorite coin 

[franky1]

funny thing is, with the EU being so tight on crypto with the Mica rules.. it turns out that of the banks that report to BIS, it is actually the EU that holds the most crypto of all them banks..(as of Q4 2023)
https://bitcointalk.org/index.php?topic=5522234.msg65014034#msg65014034

[kotajikikox]

Does anyone know whether the decisions by BIS are obligatory or recommendations?

From what I have seen, it seems only like an option. Articles are very deliberate with the words they use. The word ‘could’ is very telling. This tells me that if the banks wanted to, they could but it’s not a requirement.

If a country whose central bank is a member of the institution wants to exceed the 2% limit, can they do it without leaving the institution or not?

In the shared quote, it says the 2% is a compromise from the 5% so I would assume that this is the maximum they are allowed to have.

[franky1]

Does anyone know whether the decisions by BIS are obligatory or recommendations?

From what I have seen, it seems only like an option. Articles are very deliberate with the words they use. The word ‘could’ is very telling. This tells me that if the banks wanted to, they could but it’s not a requirement.

if you read all the commentary of the consultation periods. majority of central banks associated with the BIS were pushing the BIS to start making regulations to allow them to invest in crypto. so although not a requirement to invest EG forced to buy crypto.. the banks actually wanted permission/allowances to invest in crypto, previously not allowed

[shield132]

Banks have about $188T:

The value of bank assets worldwide increased gradually between 2002 and 2023, despite some fluctuation. In 2023, global bank assets amounted to more than 188 trillion U.S. dollars, up from 183.2 trillion U.S. dollars a year earlier.

At 2%, this represents $3.76T in Bitcoin. For comparison, the current market cap of Bitcoin is $2.05T.

This, even at 2%, is a game changer for Bitcoin.

That's a game changer for Bitcoin. If all banks keep their 2% reserves in Bitcoin, then the price of Bitcoin will skyrocket and go to the moon, 1 Million dollars per coin will become more realistic. I think that many major banks will keep their reserves in Bitcoin. If a company like BlackRock got interested and involved in the Bitcoin ETF acceptance process, then it means that big guys are interested in investing in crypto. I think that they'll keep their reserves mostly in Bitcoin and Ethereum.

People pay more attention to a certain president and his promises, while on the other hand, news like this can have a much greater impact on the price of BTC

That's how it works. People don't have the skills to analyze the fact that banks keeping 2% of their assets in crypto will have more power on the price than Trump's any statements. People think that, for example, if Trump buys, then it's cool and everyone will buy while they don't analyze the real power of 188 trillion dollars.

[EluguHcman]

Once the banks fully embrace crypto that basically will green light any red light or yellow lights within organizations / governments that are still trying to make these decisions because at that point it will be much easier for them to have custody of these with banking custodial solutions that have been implemented and it will further legitimize Bitcoin as a result as well. Pretty freaking epic when you have every bank trying to get bitcoin on their balance sheet if its not already happening it will soon be. It will have a HUGE impact on our favorite coin 

This move of the central banks to hold their reserve on Bitcoin is a promise to drainage other institutions to adopt the strategic the strategic reserve as well and once they do, it is sure of turning out to green lightening to the Bitcoin market in the main time.
I said main time because because on the series of adoptors buying Bitcoins gradually and steady is also how steady and gradually Bitcoin price would keep growing.

Therein is point we would even find the impact of those institutions which have not been able to buy Bitcoin yet because when the finally buys the Bitcoin in the future would contribute to further increase of Bitcoin.

So indirectly these slacking institutions later to adopt Bitcoin will also act as reserve of Bitcoin values as it would perform series of market increases but if every of the expected institutions come to adopt this strategic reserve at same time, the green lights of Bitcoin would come to a time of reaching it maximum price as there is no value of further adoptors that is weighty enough to bring increase to the markets.

Note: the regulatory compliance police states the central banks would not exceed to have it reserve on Bitcoin above 2%.
Although the future promises of Bitcoin price is not pegged on just the banks but also as the private institutions but while we considers the leadership of the governments facilities adopting Bitcoins, it as well encourages the private institutions to follow the trends. Let us also be aware that most of the institution resources are in corporation with the government with Central regulations.

Symbolically on this mode, the green lights will ever turnup even after the so yello or red lights. Then there should be that valuable reasons of adoptors to dive into the Bitcoin market.

[Synchronice]

Let's be conservative and assume we continue with the proposed 2%, and not the 5% that banks want.

Banks have about $188T:

The value of bank assets worldwide increased gradually between 2002 and 2023, despite some fluctuation. In 2023, global bank assets amounted to more than 188 trillion U.S. dollars, up from 183.2 trillion U.S. dollars a year earlier.

At 2%, this represents $3.76T in Bitcoin. For comparison, the current market cap of Bitcoin is $2.05T.

This, even at 2%, is a game changer for Bitcoin.

I don't understand why this topic isn't more popular because this is one of the biggest news that I've seen. This allowance is nothing on its own but it's a huge thing in a way that as you mentioned, banks have a huge market cap and the trend goes in favor of cryptocurrencies, so, over time, it's guaranteed that almost every bank will keep 2% of their reserves in Bitcoin but I'm also sure that this limit will soon increase, Bitcoin just needs to be more mature and less speculative.

Everything is becoming more interesting. One of the best asset of the future is here in front of us and I don't understand why there aren't many holders.

[franky1]

Let's be conservative and assume we continue with the proposed 2%, and not the 5% that banks want.

Banks have about $188T:

The value of bank assets worldwide increased gradually between 2002 and 2023, despite some fluctuation. In 2023, global bank assets amounted to more than 188 trillion U.S. dollars, up from 183.2 trillion U.S. dollars a year earlier.

At 2%, this represents $3.76T in Bitcoin. For comparison, the current market cap of Bitcoin is $2.05T.

This, even at 2%, is a game changer for Bitcoin.

I don't understand why this topic isn't more popular because this is one of the biggest news that I've seen. This allowance is nothing on its own but it's a huge thing in a way that as you mentioned, banks have a huge market cap and the trend goes in favor of cryptocurrencies, so, over time, it's guaranteed that almost every bank will keep 2% of their reserves in Bitcoin but I'm also sure that this limit will soon increase, Bitcoin just needs to be more mature and less speculative.

Everything is becoming more interesting. One of the best asset of the future is here in front of us and I don't understand why there aren't many holders.

just to make you and all readers of this topic aware
banks DO NOT have $188T

the $188T number is a ESTIMATE IF, yes IF the banks were magically able to sell all assets at the exact same millisecond where there are buyers that refuse to buy for less

now here is the thing.. there is no $188T money in existence.. much like the bitcoin market cap $2T is not of actual money held in reserve somewhere

instead these estimates/valuations are based on:
current market price for one unit * total units of asset

however if everyone start selling all assets, the current price for one unit would crash instantly

yep the first $1t sells would cause a double digit % drop of market price. the other $187T of assets would get to $0 meaning there would only be in true monetary transfer from buyer to seller of only a couple trillion of assets in real money

[NotATether]

2 percent is an acceptable threshold for banks since we don't want them going all in with BTC and then a bank run causes the institution to go bust just because bitcoin drops by 50% or something. That would be a really bad thig to happen to crypto at large.

I just wish El Salvador was still holding Btcoin and didn't cave in. This would have been really good for them. Screw the IMF.

[martinex]

Once the banks fully embrace crypto that basically will green light any red light or yellow lights within organizations / governments that are still trying to make these decisions because at that point it will be much easier for them to have custody of these with banking custodial solutions that have been implemented and it will further legitimize Bitcoin as a result as well. Pretty freaking epic when you have every bank trying to get bitcoin on their balance sheet if its not already happening it will soon be. It will have a HUGE impact on our favorite coin 

Of course, all those who hesitate to buy will return because it has become an official and valuable asset, banks also automatically buy it in large quantities for their reserves. What we fear is that users will later store their BTC in the bank, not in the wallet they have and should. Well, this will be chaotic and not much different from when they stored their fiat before and we know the biggest financial player ( Bankster) is actually the bank itself.

[Synchronice]

just to make you and all readers of this topic aware
banks DO NOT have $188T

the $188T number is a ESTIMATE IF, yes IF the banks were magically able to sell all assets at the exact same millisecond where there are buyers that refuse to buy for less

I know that and thank you for explaining it to the public but anyway, if banks start saving 2% of their reserves in Bitcoin, I think that they'll do it mostly from upcoming deposits and future profit from loans.

now here is the thing.. there is no $188T money in existence.. much like the bitcoin market cap $2T is not of actual money held in reserve somewhere

instead these estimates/valuations are based on:
current market price for one unit * total units of asset

however if everyone start selling all assets, the current price for one unit would crash instantly

yep the first $1t sells would cause a double digit % drop of market price. the other $187T of assets would get to $0 meaning there would only be in true monetary transfer from buyer to seller of only a couple trillion of assets in real money

You are right but people don't know that. For example, lets talk about rich people. People think that Jeff Bezos has billions of dollars cash at house but they don't know that it's not how it works, he has assets and it's a virtual value, he can only get cash after selling those assets and even in that case, you can't sell everything to get all the cash because, as you said, price will drop.

I just wish El Salvador was still holding Btcoin and didn't cave in. This would have been really good for them. Screw the IMF.

I think that it was done for marketing and it did its job very well but I think they were forced by IMF to drop Bitcoin.

[Lucius]

People pay more attention to a certain president and his promises, while on the other hand, news like this can have a much greater impact on the price of BTC

That's how it works. People don't have the skills to analyze the fact that banks keeping 2% of their assets in crypto will have more power on the price than Trump's any statements. People think that, for example, if Trump buys, then it's cool and everyone will buy while they don't analyze the real power of 188 trillion dollars.

The world is becoming an increasingly strange place, because it's hard for me to explain to myself why the average person chooses complete chaos instead of some kind of stability and balance, and why people are fascinated with what we were once taught was completely wrong and undesirable. Donald and his "friends" have already amassed millions through their worthless meme coins, and now they have that greedy smile on their face because they know they can do it for at least another 4 years.

Banks are, of course, a much more important story that everyone should be focused on, but not only because they have the green light to allocate part of their assets to cryptocurrencies, but also because a paradox is happening in which not only banks, but also large companies and funds are trying to use BTC for their own profit - and for more than 10 years they have not only spoken against BTC, but also financed various fools to spread anti-BTC agendas.

What I want to say is that, on the one hand, all this potential money can contribute to the growth of the BTC price - but in the not so distant future, the majority of BTC could be found in the possession of banks, funds and companies - while also control over the largest mining farms could be held by these same entities.

It is no secret that BlackRock bought large shares in the largest mining farms, and that it clearly wrote that it retains the right to decide which chain will follow in the case of a fork, with the emphasis that it may be the chain that will not have the greatest support.

This will be a big challenge for BTC in terms of remaining as it is today, which means with a clearly defined max supply and being decentralized and based on PoW.

[bettercrypto]

This means that the 2% is just a proposal until now, because there is no international agreement that allows central banks to hold 2% reserves in bitcoin. Therefore, it is still unclear whether
this will happen, right?

Because as far as I know, cryptocurrency or bitcoin is still held at the discretion of central banks if I am not mistaken in this matter, in short,
central banks are still in the stage of exploring this situation.

[franky1]

I just wish El Salvador was still holding Btcoin and didn't cave in. This would have been really good for them. Screw the IMF.

I think that it was done for marketing and it did its job very well but I think they were forced by IMF to drop Bitcoin.

they still hold bitcoin as government reserve, they just changed legal tender laws due to the imf to that of where retailers now only voluntarily could accept bitcoin as payment(via a cex account) rather than old law(2021) mandating that retailers had to have a chivo account and had to accept bitcoin for payment should a customer ask to pay with btc

it was a kinda easy thing to drop to appease the IMF as el salvador was conned into getting retailers to accept LN:Msats using a shoddy LN access hub, pretending it was bitcoin 2.0 (the LN hub was the backbone of the original chivo wallet) which bottlenecked many users funds, so they never truly accepted onchain btc as the mandated legal tender

[moneystery]

....

Everything is becoming more interesting. One of the best asset of the future is here in front of us and I don't understand why there aren't many holders.

many people already know that bitcoin has grown significantly, but most of them are not convinced of it, and in the end when bitcoin has soared high later they will also realize that bitcoin is not what they thought so far and begin to realize that their mistake was not investing from the start on it. that is a classic thing, we have often met people like this who regret when they did not invest from the start... but there will still be people like that. so when we have the opportunity to invest, it is better to invest from the start, do not wait until we regret it.