Keep digging deeper.
You do know that the Bank of International Settlements "allows" BTC as a reserve asset as of 1 Jan 2025, don't you?
It doesn't take much to put two and two together.
I hadn't heard of this, so I looked it up. Unlike you, however, I actually bothered to read more than just the headline. Rather than this rule being some sort of Bitcoin/crypto endorsement, what it actually entails is the BIS putting a strict
limit on banks' exposure to crypto. Far from encouraging banks from getting involved with crypto, the BIS is prophylactically attempting to limit the traditional banking system's vulnerability to any contagion from the crypto space.
Here is the report you can read for yourself.
They designate crypto assets as falling into group 1 (stablecoins or other "pegged" cryptos) and group 2 (unbacked cryptos like Bitcoin and Ethereum).
Group 2 exposure limit: A bank’s total exposure to Group 2 crypto assets must not exceed 2%of the bank’s Tier 1 capital and should generally be lower than 1%. Banks breaching the 1% limit will apply the more conservative Group 2b capital treatment to the amount by which the limit is exceeded. Breaching the 2% limit will result in the whole of Group 2 exposures being subject to the Group 2b capital treatment.
They also require that group 2 crypto assets carry a risk weighting of 1250%, which is essentially a rating of how risky the asset is (i.e. U.S. Treasury bonds are risk weighted at 0%, mortgage loans at 50%, publicly traded stock at 300%). A higher risk weighting requires a commensurately higher level of capital reserves that the bank must maintain on its books. A risk weighting of 1250% is comically high, essentially the worst form of unsecured debt possible. Imagine if you bought an unpaid loan from a crackhead currently serving a 20 year prison sentence and you're in the ballpark. That's how credible the BIS views Bitcoin as far as being a reserve asset.
In other words, these rules are designed to
heavily discourage banks from getting involved in crypto.
