The principle of maximum prudence on cryptocurrencies in Basel and Musk’s turnaround

Despite all attempts to make it mainstream, the cryptocurrency continues to be clouded by an aura of mystery and danger. At least for the big regulators. The Basel Committee for Banking Supervision has issued a new cry of alarm and a request for more stringent rules to protect banks and consumers from the volatility of crypto coins. The proposal is to introduce strict regulation in the wake of the most rigid prudential conservatism, which would oblige banks to hold sufficient reserves to cover 100% of potential losses: an unprecedented one-to-one provision. It would be the most stringent capital requirement than any other asset, thus showing how Basel regulators consider cryptocurrencies to be far more risky and volatile than traditional investments in stocks or bonds. “Crypto-assets have raised a number of issues regarding consumer protection, money laundering and the financing of terrorist organizations, as well as the carbon footprint for their extraction,” the Basel statements read. The Board of Regulators wants to get ahead: even if the exposure of banks is currently very limited, the growth of cryptocurrencies and related services “has the potential to be worrying with regard to financial stability, and increase the risks for banks. ”The greatest fear is for the volatility of crypto assets, which are not supported by real assets capable of anchoring their prices. To warn, the ups and downs experienced by Bitcoin in recent months, with an all-time high of 64 thousand dollars reached in April (+ 450% in just six months), then the collapse of 40% following Chinese regulations and the tira e spring with Tesla and Elon Musk. Yet Bitcoin, or at least its investors, despite the claim of absolute independence of cryptocurrencies, could benefit from greater regulation. After the publication of the Basel report, the price of Bitcoin rose again by 5%, a sign, perhaps, that the idea was not taken so badly. The recent decision by the El Salvador government to initiate the procedure to give legal tender to the cryptocurrency alongside the official currency, the first case in the world (always if the project gets the approval of the International Monetary Fund), is also driving it. And the value has risen especially after yet another turnaround by the founder of Tesla who in the past few hours has decided to again accept bitcoin payments for his electric cars after having confirmed that it will be implemented for mining activities. Reasonable use of clean energy The rules required by the Basel Committee could put many banks in trouble, effectively preventing a number of institutions from working with cryptocurrencies, even though regulation shouldn’t touch stablecoins as tightly. digital currencies anchored to the value of fiat currencies. The big lenders have long been divided on the subject. Some, like Goldman Sachs and Standard Chartered, have launched their own crypto trading desks, while others, like HSBC, have decided to step out of the game. NatWest has gone so far as to refuse to serve companies that also accept payments in cryptocurrencies, rejecting the likes of Lush, the ethical cosmetics company, and WeWork, big in the branch of office sharing and services for businesses.