TheDinarian
News • Business • Investing & Finance
đŸ’„Basel crypto rules: largest banks can have $20bn combined engagementđŸ’„
October 30, 2022
post photo preview

(Dinarian Note: Click on the 1st link and you can read all the submissions from companies, Here is RIPPLES. Mind you, this is a startup company in San Fransisco writing to the Bank Of International Settlements, and YES XRP IS MENTIONED!)

The second crypto-asset consultation by the Basel Committee for Banking Supervision closed at the end of September and it published the feedback received. One of the proposed rules limits the amount of bank cryptocurrency exposures to 1% of Tier 1 bank capital. Some of the feedback concluded that means that most of the world’s largest banks can have a combined $20 billion exposure to crypto-assets. 

The four most restrictive proposed Basel rules

There’s a lot of detail in the proposed Basel rules, but the four most significant issues are:

  1. Cryptocurrency exposures require a dollar-for-dollar set aside of tier 1 capital by banks
  2. Total cryptocurrency exposures are limited to 1% of Tier 1 capital
  3. DLT use for traditional assets attracts a 2.5% surcharge
  4. Cryptocurrency custody also has a dollar-for-dollar capital requirement.

We previously summarized the joint feedback from major trade associations.

Cryptocurrency exposure limit

The combined Tier 1 capital of 21 of the 30 globally systemically important banks (G-SIBs) – excluding nine banks in China, Japan and Switzerland – totals $2 trillion, limiting their combined Group 2 crypto-asset (crytocurrencies) exposure to $20 billion. The crypto market is currently worth more than $950 billion. So together, the banks could have a maximum exposure of 2% to the whole cryptocurrency market.

The CME made a similar calculation, concluding that all its CME Clearing bank member firms could have a combined exposure of $20 billion.

Group 2 crypto-assets have a 1250% risk weighting, which means that banks have to set aside a dollar of capital for every dollar of cryptocurrency exposure. Although some hedging is now accounted for (up to 65%), in the absence of a cap, this would already disincentivize bank exposures.

Societe Generale observed that this “risks cementing control of these markets to non-banking players through excessively burdensome requirements.”

The World Federation of Exchanges and the Deutsche Börse had similar sentiments. “The proposed methodology has no precedent in financial market regulation when comparing it to other economically more volatile and less predictable asset classes (such as other complex financial instruments),” wrote the Deutsche Börse. “Exposure limits on individual asset classes for banks have to the best of our knowledge not even been proposed during the 2008 global financial crisis.”

A few large crypto exchanges also provided responses and they too objected to the cap, despite banks potentially being competition. Institutional adoption is viewed by many as a critical path to crypto-assets becoming mainstream.

Same activity, same risk, same treatment?

As much as the Tier 1 cap on cryptocurrencies was universally slated, so was the 2.5% infrastructure risk addon for Group 1 assets, which covers tokenized traditional assets and extremely conservative stablecoins.

“It is contradictory with the general ‘same activity, same risk, same treatment’ principle, acknowledged by the BCBS, especially for assets belonging to group 1a (tokenized traditional assets),” wrote BNP Paribas.

Societe Generale characterized it as “excessively conservative and lacks evidence-based justification. The use of DLT could lower the level of operational risks in institutions.”

Talking about the 2.5% surcharge on tokenizing conventional assets, the German Banking Industry Committee wrote, “there is a risk that this activity could move from the regulated financial sector to less regulated or completely unregulated sectors. This cannot be intended by the Basel Committee.”

The 2.5% addon “sets a precedent for applying capital penalties for the introduction of new technologies,” wrote the CME, which characterized it as a tax. “The stated aim of the FSB, International Organization of Securities Commissions (IOSCO) and the BCBS is to achieve a technology-neutral approach to cryptoasset regulation.”

The Deutsche Börse also pointed to the lack of technology neutrality regarding whether the blockchain infrastructure is permissioned or permissionless, because the Basel rules strongly favor permissioned DLT.

Additional burdens on activities that are already regulated

Different types of regulated institutions complained that they are already subject to prudential regulation and hence shouldn’t have additional burdens imposed.

For example, both the CME and CBOE stated that centrally cleared derivatives should be excluded from the 1% of Tier 1 capital exposure limits. 

Fnality, the DLT-based payments infrastructure, believes that the 2.5% DLT addon for tokenized conventional assets should not apply as it already complies with the Principles of Financial Market Infrastructures.

The World Federation of Exchanges asked for crypto-assets traded on regulated exchanges to be treated the same as their traditional counterparts. This especially relates to the 2.5% DLT addon, “particularly when the DLT is managed by an authorised exchange/CCP, which must and does take into account such risks.”

Crypto custody on the balance sheet

In April, the SEC imposed a new accounting rule, requiring crypto-asset custodians to put the assets they custody on their balance sheet. Normally assets owned by the banks’ clients don’t touch the balance sheet. The rule means that for every dollar of cryptocurrency under custody, a bank has to set aside a dollar of capital, which is not a viable business model. State Street described the rule as ‘insane’. The major custodians have all objected to the rule.

As an example, at the end of June 2022, BNY Mellon, the world’s largest conventional custodian, had assets under custody of $43 trillion with $21.8 billion of Tier 1 capital. 

Hence such a rule essentially blocks conventional custodians from participating in cryptocurrency custody beyond a tiny scale.

The first Basel proposal did not take account of custodied assets. But the second proposal published in June stated that crypto-asset exposures also apply to “activities, such as nonfiduciary custodial services, that may only give rise to operational risk.”

The Association of Global Custodians wrote, “Our members do not believe that it’s appropriate for the Committee to use the Second Consultation to redefine the current understanding of the term ‘exposure’ to include assets held in custody.” The American Bankers Association concurred.

Three of the world’s largest conventional custodians, BNY Mellon, State Street and Northern Trust, wrote a combined letter objecting to this, as well as the 2.5% DLT addon for conventional assets and the 1% Tier 1 cap. 

Stablecoins and basis risk

There was a fair amount of feedback about stablecoins. 

Our reading of the proposal is that tokenized bank deposits are considered Group 1a traditional assets as opposed to 1b stablecoins. Stablecoin issuer Circle seemed to think the same, but BNP Paribas asked for explicit clarification.

The proposed Basel rules include some fairly burdensome tests on stablecoins, so it’s unlikely that any current stablecoins would be considered Group 1. Failing that, they become Group 2 with its 1250% risk weighting or dollar-for-dollar capital requirement.

The first test relates to the ability of a user to redeem a stablecoin, and the second is for basis risk. That considers how often a stablecoin has lost its peg recently using a conservative 20 basis points.

Given banks are already prudentially regulated, BNP Paribas believes these tests should not apply to bank-issued stablecoins. The Basel proposals already state that to qualify as Group 1b, a stablecoin has to have a supervisor that imposes prudential capital and liquidity requirements. The proposals state that the Basel Committee is considering replacing the two tests with this supervision requirement.

FTX US made the logical point that if a stablecoin passes the redemption test, then the basis test is irrelevant because a user can redeem the stablecoin if the peg is lost. The redemption risk test is meant to work even in a crisis situation. However, regulators would probably argue that they are intentionally being prudent.

Stablecoin issuer Circle argued that its stablecoin is fully backed by cash and cash equivalents and hence “has reserve holdings that are safer than tokenised deposits, which the BCBS classifies as Group 1a”. It wants to see safely backed stablecoins treated the same as tokenized deposits.

Overall the feedback was more or less consistent in asking for more relaxed rules. The second round of proposals was in some ways more accommodating but considerably more restrictive in other significant aspects.

Shortly before the second consultation round started, the Chair of the Basel Committee Pablo Hernández de Cos, said, “diluting bank capital requirements because of a fear that crypto-asset activities will migrate outside the regulated banking system is not a convincing argument.”

Link

community logo
Join the TheDinarian Community
To read more articles like this, sign up and join my community today
0
What else you may like

Videos
Podcasts
Posts
Articles
🚹BREAKING: BRAD GARLINGHOUSE SAYS XRP IS REWRITING THE ENTIRE BANKING SYSTEM đŸ’ŁđŸ’„

“WE UNDERESTIMATE HOW MASSIVE THIS SHIFT REALLY IS” – XRP VEGAS đŸ”„

👑 Ripple CEO Brad Garlinghouse just stunned the crowd at XRP Las Vegas with one of the boldest declarations yet: “This isn’t a zero-sum game
 we’re growing the pie. And XRP might grow it faster.”

💡 He backed David Schwartz’s bombshell vision: "We’re rewiring the global financial system over the next 10–20 years — and we’re just getting started."

💬 Brad made it clear: ‱ BTC ≠ enemy — if they win, we win đŸ€

‱ The real enemy? Outdated infrastructure 🏩đŸȘ“

‱ Ripple is now unshackled — building the future, not fighting the past 🚀

🔓 Hidden Road deal = strategic reset.

🧠 Conversation has shifted from “what happened” to “what’s next.”

00:01:13
Have you noticed a Personality Change in those who took the experimental Covid Vaccines?

If so, here’s the theory as to why this has happened, and it makes perfect sense as to why the elites would do this. THEY do not want you to be able to step into your power. With this destroyed, THEY win.

00:01:10
Stargate: Establishing the Physical Foundations of the AI Revolution đŸ›°ïžđŸŒŽ

The Stargate initiative represents the most substantial investment in artificial intelligence infrastructure to date, as it begins to materialize on a global scale. While many perceive AI as an ethereal technology—simply accessed via applications like ChatGPT đŸ€–â€”each digital interaction is, in fact, powered by extensive physical resources: vast data centers 🏱, thousands of cutting-edge GPUs đŸ’Ÿ, sophisticated cooling systems 💧, dedicated power grids ⚡, and essential water pipelines 🚰. AI does not reside on personal devices; it is anchored on Earth and demands significant resources.

As artificial intelligence continues to advance, its infrastructure needs only intensify. Regardless of improvements in model efficiency, the explosive growth in usage—billions of queries, ongoing model training, and worldwide deployment—necessitates ever-greater computing power, land, electricity, and semiconductors. This expansion is not plateauing; it is accelerating 📈.

Stargate stands ...

00:01:55
👉 Coinbase just launched an AI agent for Crypto Trading

Custom AI assistants that print money in your sleep? 🔜

The future of Crypto x AI is about to go crazy.

👉 Here’s what you need to know:

💠 'Based Agent' enables creation of custom AI agents
💠 Users set up personalized agents in < 3 minutes
💠 Equipped w/ crypto wallet and on-chain functions
💠 Capable of completing trades, swaps, and staking
💠 Integrates with Coinbase’s SDK, OpenAI, & Replit

👉 What this means for the future of Crypto:

1. Open Access: Democratized access to advanced trading
2. Automated Txns: Complex trades + streamlined on-chain activity
3. AI Dominance: Est ~80% of crypto 👉txns done by AI agents by 2025

🚹 I personally wouldn't bet against Brian Armstrong and Jesse Pollak.

👉 Coinbase just launched an AI agent for Crypto Trading
‌MAJOR CONFIRMATION DIRECTLY FROM SWIFT

‌MAJOR CONFIRMATION DIRECTLY FROM SWIFT: “No more delays — THE NOVEMBER 2025 DEADLINE FOR ISO 20022 MIGRATION IS FINAL AND WILL NOT MOVE.”‌

OP: @Smqkedqg

post photo preview
The Vatican's Control Runs Deep 👀

The Vatican has been the subject of countless theories throughout history. From secret archives to alleged world domination schemes. Let's explore the most common Vatican theories, their origins, and what we actually know.

The Major Vatican Theories:

The Illuminati Connection: The Vatican secretly controls or collaborates with the Illuminati to establish a New World Order.

Secret Archives Control: The Vatican Secret Archives contain proof of alien contact, suppressed scientific discoveries, or evidence of historical cover-ups.

The P2 Masonic Lodge Scandal: The Vatican Bank was involved in a massive conspiracy involving the P2 Masonic lodge, political corruption, and murder.

Suppression of Scientific Knowledge: The Vatican has systematically suppressed scientific discoveries that contradict Church doctrine.

The Third Secret of Fatima: The Vatican is hiding apocalyptic prophecies revealed at Fatima that would cause global panic if disclosed.

Financial Scandals: Legitimate concerns about ...

post photo preview
Veritaseum Hodlers, Are You Ready For Chaos? 🚀 đŸ‘©‍🚀

What would happen if Veritaseum was "Resurrected" from the Land of Dead Cryptos? Would Clif High's prediction of Veri trading 1 to 1 with Bitcoin actually come TRUE?! We may just find out SOONER than you think!!

post photo preview
Stellar's Ecosystem Surges Forward: Smart Contracts, Lightning Speed, and Real-World Impact in 2025

The Stellar blockchain ecosystem is experiencing remarkable momentum in 2025, with groundbreaking technical achievements and expanding real-world adoption that position it as a major player in the decentralized finance landscape. From lightning-fast transaction speeds to innovative smart contract capabilities, Stellar is demonstrating that blockchain technology can deliver both performance and practical utility.

Technical Breakthroughs Drive Performance

The Stellar Development Foundation's Q1 2025 quarterly report reveals impressive technical milestones that showcase the network's maturation. The platform now processes an astounding 5,000 transactions per second with remarkably fast 2.5-second block times, putting it among the fastest blockchain networks in operation today.

This performance leap isn't just about raw numbers—it represents Stellar's commitment to creating infrastructure that can handle real-world demand. Whether it's cross-border payments, asset tokenization, or decentralized applications, the network's enhanced capabilities provide the foundation for scalable blockchain solutions.

Smart Contracts Get Smarter with Soroban

One of the most significant developments has been the launch and continued evolution of Soroban, Stellar's smart contract platform. The introduction of Contract Copilot represents a major advancement in developer experience, enabling faster and safer smart contract development through enhanced tooling and guidance.

This focus on developer experience is crucial for ecosystem growth. By lowering barriers to entry and improving the development process, Stellar is positioning itself to attract innovative projects and talented developers who might otherwise choose competing platforms.

New Token Standards Meet Market Needs

The Stellar Development Foundation has introduced new token standards developed specifically based on feedback from developers and institutional users. This responsive approach to platform development demonstrates Stellar's commitment to building technology that meets actual market needs rather than theoretical requirements.

These standards are particularly important as institutional adoption continues to grow, with organizations requiring robust, compliant, and flexible token frameworks for their blockchain initiatives.

Global USDC Integration Expands Utility

The integration of USDC across Stellar's global network represents a significant milestone for practical cryptocurrency adoption. Stablecoins like USDC provide the price stability necessary for everyday transactions and business operations, making them crucial for blockchain platforms seeking real-world utility.

This integration is particularly impactful in emerging markets, where access to stable digital currencies can provide financial services to underbanked populations and facilitate more efficient cross-border transactions.

Industry Events Build Community Momentum

The Stellar ecosystem's growing influence is evident in its presence at major industry events. The foundation's participation as a sponsor at Consensus 2025 in Toronto and Digital Assets Week in New York demonstrates its commitment to engaging with builders, investors, and institutional leaders across the blockchain space.

These events serve as crucial networking opportunities and platforms for showcasing innovative projects within the Stellar ecosystem. Recent Meridian events have highlighted creative projects like Skyhitz and HoneyCoin, illustrating the collaborative spirit and diverse applications being built on the platform.

Real-World Impact in Emerging Markets

Perhaps most importantly, Stellar's growth isn't just about technical metrics—it's about real-world impact. The platform's focus on emerging markets addresses genuine financial inclusion challenges, providing efficient payment rails and access to digital financial services where traditional banking infrastructure may be limited.

This practical approach to blockchain implementation sets Stellar apart from projects that focus primarily on speculative trading or theoretical use cases. By solving actual problems for real users, Stellar is building sustainable demand for its technology.

Looking Ahead: Enterprise-Grade Infrastructure

Stellar positions itself as offering enterprise-grade asset tokenization alongside its DeFi capabilities and payment infrastructure. This comprehensive approach makes it attractive to institutions looking for a single platform that can handle multiple blockchain use cases.

The combination of fast transactions, low costs, smart contract capabilities, and regulatory-conscious development creates a compelling value proposition for enterprises considering blockchain adoption.

The Road Forward

As 2025 progresses, Stellar's ecosystem appears well-positioned for continued growth. The technical infrastructure improvements, developer-focused enhancements, and real-world adoption initiatives create a strong foundation for expanding use cases and user adoption.

The blockchain industry has seen many projects promise revolutionary capabilities, but Stellar's focus on delivering measurable performance improvements and practical solutions suggests a mature approach to blockchain development. With transaction speeds that rival traditional payment systems and growing institutional adoption, Stellar is demonstrating that blockchain technology can move beyond experimental phases into mainstream utility.

For developers, institutions, and users looking for blockchain solutions that prioritize both performance and practical applicability, Stellar's 2025 developments represent significant progress toward a more accessible and useful decentralized financial ecosystem.

Source: The Dinarian ⚡ Claude AI

🙏 Donations Accepted 🙏

If you find value in my content, consider showing your support via:

💳 PayPal: 
1) Simply scan the QR code below đŸ“Č
2) https://www.paypal.me/thedinarian

🔗 Crypto – Support via Coinbase Wallet to: [email protected]

Or Buy me a coffee: https://buymeacoffee.com/thedinarian

Your generosity keeps this mission alive, for all! NamastĂ© 🙏 The Dinarian

Read full Article
post photo preview
Soroban Security Audit Bank: Raising the Standard for Smart Contract Security

The Stellar Development Foundation (SDF) is deeply committed to helping ensure that the highest security standards are available for projects building on the Stellar network. Last year SDF launched the Soroban Security Audit Bank, an initiative to provide projects access to auditing experts and tooling that are proven to help prevent hacks by catching potential bugs, inefficiencies, and security flaws before contracts go live. Through the Soroban Security Audit Bank, we’re empowering teams building on Soroban with comprehensive security audits from leading audit firms, enhanced readiness support, and robust tooling, significantly elevating the ecosystem’s safety and efficiency.

Since launch, the Soroban Security Audit Bank has successfully conducted over 40 essential audits, deploying over $3 million to support security of the smart contracts on Stellar. Check it out!

 

Ecosystem Success Stories: How the Soroban Audit Bank Drives Security Forward

By making automated formal verification available to developers, in addition to allocating significant budget for securing many of the top DeFi protocols built on top of Stellar, SDF has established a new security standard in the Web3 ecosystem. –Mooly Sagiv, Co-Founder of Certora
SDF has been a strong partner as we’ve worked with teams across the Stellar ecosystem. SDF’s Audit Bank initiative allows for a smooth and streamlined review process, and is a clear reflection of the Stellar ecosystem’s enhanced commitment to security. –Robert Chen, CEO of OtterSec
 

Leading projects within the Soroban ecosystem have highlighted the impact of the Audit Bank

Finding a good auditor is difficult, expensive, and high-stakes. The Audit Bank streamlines the process and supports ecosystem projects with security review at critical growth milestones. –Markus Paulson, Co-Founder of Script3
The audit firms we worked with deeply understood the full ecosystem and the underlying protocols used. Their expertise and the tools from the Audit Bank strengthened our security and supported user and investor trust. –Esteban Iglesias Manríquez, Co-Founder of Palta.Labs

What's New in 2025: Enhanced Audit Support for Soroban Builders

Teams building financial protocols, high-dependency data services, high-traction dApps funded by the Stellar Community Fund are able to request an audit and will typically be matched with a reputable audit firm within two weeks. We recently restructured the program for this year to enhance audit efficiency and incentivize accountability, and rapid and complete vulnerability remediation:

  • Complimentary Initial Audit: Projects will need to contribute 5% of the audit cost upfront, but this co-payment amount is eligible for a full refund, provided that critical, high, and medium vulnerabilities identified are swiftly remediated within 20 business days of receiving the initial audit report (learn more).
  • Incentivized Security at Key Traction Milestones: Complimentary, extensive follow-up audits are available as projects achieve critical traction milestones (e.g., $10M and $100M TVL). These audits include deeper assessments such as formal verification or competitive audits, significantly boosting project security at pivotal stages.
  • Advanced Security Tooling: Projects can enhance their security self-serve through complimentary or discounted access to specialized tooling, which provide vulnerability detection and formal verification capabilities (see full list of available tooling). These tools are encouraged to capture ‘easy-to-spot’ issues prior to audit as well as a final check post-audit to increase the effectiveness and thoroughness of audits.
  • Enhanced Audit Readiness Support: Projects receive structured preparation support, including the implementation of best practices and security standards based on the STRIDE threat modeling framework. This ensures project teams are thoroughly prepared, optimizing audit efficiency and minimizing delays.

Get Started Today

If you're already funded through the Stellar Community Fund, meet the criteria and ready to secure your smart contracts, check your email for an invitation to submit an audit request–if you haven’t received one, contact [email protected].

If you haven't built on Stellar yet, we encourage you to start your journey with the Stellar Community Fund to become eligible for future security audits and ecosystem support. For any broader questions on the program, contact [email protected].

Also, we’re organizing an exciting series of workshops–join us for the kick-off on Soroban Security Best Practices on Friday, May 30, 2025 at 2 PM ET on @StellarOrg. Together, we're shaping a secure and resilient future for smart contracts on Stellar.

Source

🙏 Donations Accepted 🙏

If you find value in my content, consider showing your support via:

💳 PayPal: 
1) Simply scan the QR code below đŸ“Č
2) https://www.paypal.me/thedinarian

🔗 Crypto – Support via Coinbase Wallet to: [email protected]

Or Buy me a coffee: https://buymeacoffee.com/thedinarian

Your generosity keeps this mission alive, for all! NamastĂ© 🙏 The Dinarian

Read full Article
post photo preview
Santander mulls stablecoin, crypto offering

Bloomberg reported that Banco Santander is mulling introducing euro and dollar stablecoins, or potentially making a third party coin available to clients, citing sources. This move aligns with broader crypto ambitions, as its digital bank, Openbank, has reportedly applied for a European cryptocurrency license under the Mica Regulations and may enable retail access to digital assets.

Systemically important banks embrace stablecoins?

Major banks are now moving from observers to participants in this expanding market. Should Santander confirm plans to launch a stablecoin, it will be the fourth global systemically important bank (G-SIB) to do so. Societe Generale’s FORGE subsidiary launched the EURCV euro coin in 2023. Deutsche Bank is a partner in ALLUnity, another stablecoin initiative with plans to launch this year, subject to regulatory approval. And Standard Chartered is part of a joint venture in Hong Kong that intends to introduce a stablecoin.

Santander’s involvement could extend beyond an individual initiative. The bank is a shareholder in The Clearing House, where the Wall Street Journal reported that US banks are exploring the potential to create a joint stablecoin. If a US initiative took that route it could involve nine more G-SIBs including Bank of America, Barclays, BMO, BNY Mellon, Citi, HSBC, JP Morgan, TD Bank and Wells Fargo.

Apart from these initiatives, our research shows that more than 20 other banks have been involved in stablecoin projects.

Until recently stablecoins were mainly used to settle cryptocurrency transactions and by residents in countries with volatile domestic currencies. During the last year stablecoin infrastructure has been expanding, especially for mainstream cross border payments. Plus, President Trump issued an executive order prioritizing stablecoins. One of the administration’s motivations is this increases demand for US Treasuries, lowering the interest rate the government pays on the Treasury bills.

Santander as an early digital assets mover

Santander’s stablecoin consideration builds on years of blockchain experience. The bank was an early Ripple investor and previously used Ripple’s permissioned network for payments (not XRP), while also embracing permissionless blockchain activities including issuing a digital bond on Ethereum in 2019. This dual approach led to collaborations with other major players – alongside Societe Generale FORGE and Goldman Sachs, Santander participated in the European Investment Bank’s first digital bond, also on Ethereum. Currently, the bank’s most significant digital money initiative involves Fnality, the wholesale blockchain-based settlement network, where Santander ranks among 20 institutional backers and is part of the early adopter group alongside Lloyds Bank and UBS.

Source

🙏 Donations Accepted 🙏

If you find value in my content, consider showing your support via:

💳 PayPal: 
1) Simply scan the QR code below đŸ“Č
2) https://www.paypal.me/thedinarian

🔗 Crypto – Support via Coinbase Wallet to: [email protected]

Or Buy me a coffee: https://buymeacoffee.com/thedinarian

Your generosity keeps this mission alive, for all! NamastĂ© 🙏 The Dinarian

Read full Article
See More
Available on mobile and TV devices
google store google store app store app store
google store google store app tv store app tv store amazon store amazon store roku store roku store
Powered by Locals