Management oversight of the operations of the financial market Switzerland (FINMA) has advised that banks and other financial institutions to increase the coverage of the risks of investing in cryptocurrency 800 percent from their current value. This was stated by local news portal Swissinfo that has received a confidential copy of the letter FINMA organizations EXPERTsuisse.
How to insure against losses in the crypt
In a letter to FINMA recommends financial organizations to set weight risk ratio is above 800 percent “to cover market and credit risks, regardless of held trading positions”.
At the moment Bitcoin is trading at $ 6520. Therefore, when calculating risk, the Bank should consider that cryptocurrency could rise above 50 thousand dollars. Due to the new regulation FINMA, banks will create large reserve funds to cover potential losses in the crypt.
According to Cointelegraph, weight risk ratio is above 800 percent means that the financial regulator recognizes that digital assets are very volatile. In addition, FINMA has limited the maximum possible capital that institutions can use to trade on the stock market. Its value should not exceed 4 percent of total assets. If a body still reaches the limit, he will have to report to FINMA.
Finally, representatives of the financial regulator noted that the cryptocurrency could not be considered highly liquid assets. In other words, digital assets cannot be taken into account when calculating the liquidity ratio of the Bank. As reported by Swissinfo journalists, innovations should come into force before 27 November.
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We will remind, in the beginning of last month, FINMA issued the first license for the digital asset management one of the investment funds of the country. Thanks to this document the Fund will be able legally to offer their customers investment portfolios with Bitcoin and Althingi.