Global DCA Comment Letter to Bank for International Settlement on “Prudential Treatment of Cryptoasset Exposures”

Global DCA Comment Letter to Bank for International Settlement on “Prudential Treatment of Cryptoasset Exposures”

“The Committee notes that for cryptoassets that confer direct claims on a pool of traditional assets held in a bankruptcy remote vehicle, a banking institution could set the credit risk exposure of bankruptcy remote assets of the redeemer to zero only if an institution has obtained a legal opinion for all laws relevant to involved parties, including the redeemer, the special purpose vehicle (SPV) and custodian, affirming that relevant courts would recognize underlying assets held in a bankruptcy remote manner as those of the cryptoasset holder. It is difficult to see how a banking institution would be able to meet that burden. It may be more constructive if the Committee were to consider proposing alternative suggestions, that could potentially offer a different standard for credit risk exposure of cryptoassets conferring direct claims on traditional assets held in a bankruptcy remote vehicle.” – Global DCA.

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