Federal Reserve Paper Proposes New Risk Weighting Model for Crypto

New analysis published Wednesday by the Federal Reserve proposes that crypto be categorized as a distinct asset class for initial margin requirements used in “uncleared” derivatives markets, including over-the-counter trades and other transactions that do not pass through a centralized clearinghouse.

The working paper said that is because crypto is more volatile than traditional asset classes and does not fit into the risk categories outlined in the Standardized Initial Margin Model (SIMM) that…