The Bank for International Settlements (BIS) has unveiled fresh regulations for banks interested in holding XRP and other crypto assets classified as Group 2. As an organization that presents itself as the bank for central banks globally, the BIS has introduced these new rules to govern banks’ exposure to Group 2 cryptocurrencies. It is worth noting that the BIS had previously defined what falls under Group 2 in an attempt to distinguish these assets from other cryptocurrencies.
Group 2 comprises unbacked crypto assets like XRP, Bitcoin (BTC), and Ethereum (ETH). This category also includes stablecoins that lack effective stability mechanisms. According to the BIS’ classification, these assets are considered riskier due to their volatility.
Yesterday, the Bank of International Settlements released its latest requirements for banks to hold these assets in a publication. It is noteworthy that Eri, a prominent figure in the XRP community, recently drew attention to this publication in a post on X.
The BIS’ latest requirements stipulate that a bank’s total exposure to all Group 2 assets must not exceed 1% of its Tier 1 capital. For those unfamiliar, Tier 1 Capital represents a bank’s core capital. This capital serves as the primary financial buffer that absorbs losses, ensuring the bank’s stability. According to the BIS requirement, if a bank with $1 trillion in Tier 1 Capital intends to hold assets in Group 2, including XRP, the combined value of all assets must not exceed $10 billion.
Additionally, the BIS mandates that no single Group 2 cryptocurrency can make up more than 5% of the total Group 2 holdings. To provide context, if a bank’s total Group 2 holdings amount to $10 billion, its XRP holdings alone must not surpass $500 million. The same applies to other Group 1 assets.
These limits are an attempt to mitigate the risk associated with the fluctuating value of these crypto assets. While cryptocurrencies have gained significant public attention recently, certain events have exposed the risks associated with them. These events include the Terra implosion in May 2022 and the FTX collapse in November 2022.
According to the publication, the BIS’ recent requirements will come into effect on January 1, 2026. These criteria could potentially reshape how financial institutions engage with assets like XRP, Bitcoin, and Ethereum.
Crypto regulations have become a focal point as the industry continues to penetrate the mainstream scene. For instance, the European Union recently implemented the first part of its MiCA regulations, which impact stablecoins.
Mainstream banks have started to explore crypto assets. In December, the Basel Committee disclosed the crypto holdings of 19 banks across various regions. The disclosure confirmed that these banks held $205 million worth of XRP at the time.
However, despite this, XRP has not gained as much adoption from banks and financial institutions due to the ongoing SEC lawsuit. Anderson, a crypto researcher, argued in February that XRP might not see increased adoption by banks until the U.S. SEC publicly declares it is not a security.
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