Regulation
Crypto regulation deadline extended by central bank group
The Group of Governors and Supervisors of Central Banks (GHOS), the supervisory body of the Basel Committee on Banking Supervision, has just set a new deadline for the implementation of its prudential standard for bank exposures on crypto-assets. The earliest expected end date is January 2025, but the deadline has been extended to January 1, 2026.
Therefore, this modification aims to give countries sufficient time to create a clear and unified agreement. regulatory framework for exposure to crypto assets.
Updated Timeline for Crypto Regulation
The GHOS decision to delay the implementation deadline after a thorough assessment of the progress and readiness of member jurisdictions in adopting the new standards is an excellent decision. Given the different speeds of adaptation of crypto regulations, this measure aims to achieve a level of competition while making markets more stable globally.
The Basel Committee supported this prudential standard in December 2022. It aimed to respond to the risks to financial stability induced by crypto assets while promoting responsible innovation in the banking sector.
Tiff Macklem, Chairman of GHOS and Governor of the Bank of Canada, stressed the importance of a longer implementation period.
“The extension will be of great assistance in ensuring that the implementation of the cryptoasset standard is both comprehensive and uniform across all member jurisdictions,” Macklem said.
This cautious attitude is a manifestation of the general precautionary policy in an era of rapid technological development and changes in market conditions.
Regulatory Efforts of the Central Bank Group
This is part of a larger strategic plan of the Basel Committee to face new financial risks. The committee’s work program for 2023-24 focuses on digitalization, climate-related financial risks and the ongoing implementation of the Basel III framework. Through the process of landscape assessment and adaptation of regulatory measures, GHOS intends to eliminate possible weaknesses in the global banking system caused by digital assets and other new risks.
Additionally, the longer time frame is in line with crypto regulatory measures taken in other parts of the world. THE Australian Tax Office recently tightened its rules on crypto exchanges to reduce tax evasion, demonstrating a global trend toward increased scrutiny of crypto activities.
The buzz that followed the deadline extension was different in the financial markets. Cryptoasset values are always affected by regulatory news, which is a result of continued uncertainty and the important role of regulatory environments in market stability.
Nevertheless, this extension could constitute a sort of respite for banks and financial institutions, giving them more time to adjust their activities to the new standards.
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