Central Banks Are Preparing Crypto Raids

Central banks will be able to gradually integrate crypto into their reserves starting from 2025, up to a maximum of 2%, according to new prudent regulation published by the Bank for International Settlements.

Central Banks Open the Door to Crypto

The cryptographic revolution is now making its way into the very heart of the traditional banking system. Indeed, central banks around the world are preparing to integrate crypto into their balance sheets, in line with new directives from the Bank for International Settlements (BIS).

Starting from 2025, these ultimate guardians of the international monetary order will be able to hold up to 2% of their colossal foreign exchange reserves in Bitcoin, Ethereum, and other altcoins. An unprecedented move that predicts nothing less than a seismic shift in the markets.

However, this still cautious adoption of crypto assets will be done progressively and under strict control. The Basel Committee on Banking Supervision, which regulates central banks, has published a detailed framework to prevent any excessive enthusiasm by these ultra-conservative institutions. Thus, it has classified cryptos into two groups, each with different risk levels and regulations.

On one side, there are “wise” cryptos such as stablecoins pegged to traditional currencies and security tokens, in which central banks can invest without limitations. On the other side, there are more volatile and speculative cryptos like Bitcoin, capped at 2% of reserves, or even 1% if their technical infrastructure raises doubts.

In addition, the Basel Committee has established multiple safeguards to limit the risk exposure of central banks. For example, it subjects the integration of stablecoins to rigorous tests that control their issuance mode, governance, and redemption mechanisms. Moreover, the increased supervision of central banks aims to ensure that they correctly classify their digital assets.

Towards a Remake of the International Monetary System?

Although cautious, this decision is nonetheless revolutionary. For the first time, the guardians of the international monetary order are opening wide the doors of traditional finance to crypto innovation.

Certainly, initially, the impact on the crypto prices should be limited. However, in the long term, the arrival of central banks, with their colossal budgets, could completely transform and pacify this digital Wild West.

Moreover, in the long run, this adoption reflects a true Copernican revolution. Indeed, decentralized finance is gradually but surely making its way into the very heart of the banking system, up to the holiest of holies which are the central banks.

It seems that these institutions have decided that if they cannot defeat crypto, they might as well progressively assimilate it. A strategy that foreshadows a profound change in the global financial dynamic.