BIS WILL ALLOW CENTRAL BANKS TO START HOLDING CRYPTOCURRENCIES

In last year December, the banks for international settlement announced that they will allow central banks around the world to start holding cryptocurrencies on their balance sheet from 2025. This is unprecedented because BIS and the central banks have been long opposing crypto currency. This is signaling that something big is come and i think will should be ready for it. You should know the the BIS is the bank for central banks and it work closely with almost central banks in existence. Most the recent work of the BIS has involved coordinate the development of CBDC. You should that CBDC is not good because they will allow the government to have total control over what you can buy and when you buy it and even how more you can save.

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On the other hand, crypto let you have total control over your access and have total control over your assets is what it mean to be financially free. The BIS obsession with capitalization via CBDC has it root in the reality that the global financial financial system s very fragile. This fragility is based on the combination of factors including unpayable debt, technological deflation and inflation which causes distress. This is why the BIS releasing standards for banks to hold cryptocurrencies on their balance sheet is mind-boggling. Cryptocuurency are the direct opposite of what the centralized financial system want.

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The BIS document detailing crypto custody for central banks begin where the author ask for consultation about central bank holding crypto currency in June 2022. Following conversation with stakeholders, the BIS finally it crypto custody standard for central banks effect from 2025. In the second part of the document, the author break down the structure of the cryptocurrencies holding standard highlight 6 component which are group 1 cryptos, group 2 cryptos, infrastructure risk, redemption risk, group 2 limited and other elements. Group cryptocurrencies are any coins or token that are analogous to existing asset. Group 1a token are any coins or tokens that reflects any real world asset such as stocks. Group 1b token are essentially centralized stablecoins but algorithmic stablecoin don't count.

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Group 2 cryptos are any coin or token that are not analogous to existing asset. Group 2 cryptos includes unbanked crypto asset such BTC, ETH and so on. It is also said the group 2 crypto asset carry higher risk due to its volatility. Infrastructure risk refers to the addition risk for tokenise asset or stablecoin due to the network they exist on. For instance, USDC on Solana will have a high risk than USDC on Ethereum because Ethereum is more secure than Solana. Speaking of redemption risk, the author specify that this is only centralized stablecoin being kept central banks balance sheet. Before adding a stablecoin to their balance sheet, Central Bank must check if the stablecoin issue is regulated and it come redeem withdraw request. The group 2 exposure limit component is very straight forward. The author specify that central banks can only hold up to 2% their balance sheet in group 2 cryptocurrencies. As for other elements, this includes disclosure or any kind of crypto leverage of other asset of the central bank balance sheet.

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