Regulatory Shift May Allow Banks to Hold XRP
- Banks have avoided holding XRP due to Basel III regulations requiring a high-risk capital reserve of $12.50 for every $1 of XRP.
- XRP is categorized as a Type-2 crypto exposure under Basel III, leading to punitive capital requirements.
- A reclassification of XRP into a lower-risk category could change its regulatory treatment and make it viable for banks’ balance sheets.
The current regulatory framework makes holding XRP economically impractical for banks due to excessive capital requirements under Basel III. However, discussions around reclassifying XRP into a lower-risk category highlight potential changes in how banks could interact with the cryptocurrency.
If reclassified, XRP could become a Tier-1 digital asset, allowing direct balance sheet exposure without excessive capital reserves, thus enabling broader institutional participation. (Source)
