World's largest banking associations object to BIS and ask for Bitcoin and crypto allocation limit to be increased from 1% to 5%

You may remember that in June, the BIS Basel Committee on Banking Supervision made a proposal to limit banks' total exposure for what the BIS defined as Group 2 crypto assets to a maximum of 1% allocation of Tier 1 capital.

Group 2 assets according to BIS is essentially all cryptocurrencies including private stablecoins except for 'tokenized traditional assets and stablecoins' which meet specific BIS classification conditions.

Now a group of eight banking and financial industry associations have written a letter objecting to this limit and asked the exposure cap for Group 2 crypto assets to be increased from 1% to 5% allocation on a net basis.

The letter argues that a 1% cap is too prohibitive which would "preclude banks from utilising the benefits of distributed ledger technology to perform certain traditional banking, financial intermediation and other financial functions more efficiently," and also limit banks "in their ability to respond to their customers' demand for access to cryptoasset products and services."

The group includes some very influential trade associations. There's a good chance the BIS exposure limit for banks will be raised.