BIS relaxes new requirements for banks wanting to hold XRP, another Group 2 asset

The Bank for International Settlements (BIS) has issued new requirements for banks that want to hold XRP and other Group 2 cryptoassets.

The BIS, which positions itself as the bank for central banks around the world, has introduced new regulations governing banks’ exposure to Group 2 cryptocurrencies. Notably, the BIS has in the past defined what Group 2 cryptoassets are in an effort to separate them from other cryptocurrencies.

Group 2 assets include uncovered crypto assets such as XRP, Bitcoin (BTC) and Ethereum (ETH). The category also includes stablecoins that lack effective stability mechanisms. According to the BIS classification, these assets are riskier due to their volatility.

The Bank of International Settlements has issued its new criteria for holding these assets and edition yesterday. XRP community luminary Eri highlighted the publication in a recent post on X.

📢New BIS Crypto requirements
Completed
It starts on January 1, 2026
👉Total exposure of the bank to the entire group 2 (#BTC, #ETH, #XRP +) the crypto asset must remain below 1% of its Tier 1 capital.
👉No single Group 2 crypto-asset can account for more than 5% of Group 2’s total holdings.… pic.twitter.com/AV55j1H85z

— 🌸Crypto Eri 🪝Carpe Diem (@sentosumosaba) July 18, 2024

Latest BIS requirements for banks holding cryptocurrencies

In the latest requirements, the BIS has stipulated that a bank’s total exposure to all these Tier 2 assets cannot exceed 1% of its Tier 1 capital. For the uninitiated, Tier 1 Capital represents a bank’s core capital.

This capital is the primary financial reserve that absorbs losses and ensures the bank’s stability. According to the BIS requirement, if a bank with $1 trillion in Tier 1 capital seeks to hold XRP and other Tier 2 assets, the total value of all assets must not exceed $10 billion.

In addition, the BIS requires that no single Group 2 cryptocurrency can account for more than 5% of the total Group 2 holdings. To put this in perspective, if a bank’s total Group 2 holdings reach $10 billion, its holdings of XRP alone must not exceed $500 million. The same applies to other Group 1 assets.

These limits are an effort to reduce the risk posed by the fluctuating value of these cryptoassets. While cryptocurrencies have recently gained public attention, certain events have revealed the risk associated with them. These events include Implosion of Terra May 2022 a FTX collapse November 2022.

According to the publication, the recent BIS requirements are set to take effect on January 1, 2026. The criteria could change the way financial institutions interact with assets like XRP, Bitcoin and Ethereum.

Adoption of XRP among banks as a cryptocurrency is going mainstream

Cryptocurrency regulations have recently come into focus as the industry pushes further into the mainstream scene. For example, the European Union recently enacted the first part of its MiCA regulations, which relate to stablecoins.

Mainstream banks have started gaining exposure to crypto assets. Let us recall that last December the Basel Committee disclosed cryptocurrency holdings 19 banks in different regions. The disclosure confirmed that these banks held $205 million in XRP at the time.

Despite this, XRP has not received as much acceptance from banks and financial institutions due to the ongoing SEC litigation. Anderson, Cryptocurrency Researcher, they guessed in February that XRP may not see increased adoption by banks until the US SEC publicly declares that it is not a security.