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Italian Banking Association (ABI) Director-General Advocates for Fair Competition in Cryptocurrency Regulation

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It is reported that in an event today, Giovanni Sabatini, Director-General of the Italian Banking Association (ABI), called for a fair competitive environment …

Italian Banking Association (ABI) Director-General Advocates for Fair Competition in Cryptocurrency Regulation

It is reported that in an event today, Giovanni Sabatini, Director-General of the Italian Banking Association (ABI), called for a fair competitive environment for the regulation of encrypted assets. He is discussing the final Basel cryptocurrency rules, requiring banks to give 1250% risk weight to cryptocurrency (the second group of cryptocurrency assets). This usually means setting aside one euro of capital for each euro of cryptocurrency exposure. In addition, the Basel rules limit risk exposure to 2% of Tier 1 capital.

Official of the Italian Banking Association: The Basel Cryptocurrency Rules put banks at a disadvantage

Interpretation of the news:


Giovanni Sabatini, the Director-General of the Italian Banking Association (ABI), has called for a fair competitive environment for the regulation of encrypted assets. Sabatini expressed his concerns about the final Basel cryptocurrency rules, which requires banks to give 1250% risk weight to cryptocurrency assets, placing them in the second group of cryptocurrency assets. As a result, banks will have to set aside one euro of capital for each euro of cryptocurrency exposure, significantly limiting the amount of funds banks can allocate towards these assets.

Sabatini highlighted the need for a fair competitive environment for cryptocurrency regulation, as some countries have been more welcoming towards cryptocurrencies than others. He argued that strict regulations will drive crypto investments underground and increase money laundering risks, which will ultimately harm the banking sector.

The Basel rules also limit the risk exposure to 2% of Tier 1 capital, which means that banks cannot take on significant risks and exposure to cryptocurrencies. This regulation is intended to protect the stability of the banking system, as cryptocurrencies are a highly volatile and unpredictable asset class. Still, it will significantly limit the use of cryptocurrency assets in the banking sector.

This call for a fair competitive environment in cryptocurrency regulation is especially relevant given the ambiguous regulatory framework surrounding cryptocurrencies. Many countries’ financial regulators have been in a dilemma regarding whether to adopt a cautionary or welcoming approach to cryptocurrency regulation. Some countries, such as Japan and Switzerland, have taken a more welcoming stance, while others, such as China and India, have had a relatively cautious approach.

In conclusion, Giovanni Sabatini’s call for a fair competitive environment for cryptocurrency regulation is well-supported, given the unprecedented growth of cryptocurrency markets. The Basel cryptocurrency rules are a common practice for regulating institutions globally; however, creating a fair and competitive environment must consider more significant risks and opportunities associated with the growing cryptocurrency market. Therefore, policymakers must engage all relevant financial institutions in defining the regulatory framework, enabling uninterrupted and secure trade-in cryptocurrency assets.

Overall, the cautious approach to regulating cryptocurrency by the Basel committee and policymakers will ensure greater safety for the banking sector and the global economy in general, especially given the current climate of market uncertainty.

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