The global financial industry is demanding a "temporary pause" on strict new capital standards for banks' cryptocurrency holdings, arguing the rules are outdated and could stifle innovation. In a joint letter to the Basel Committee on Banking Supervision, leading financial associations contend that the framework, set to take effect in January 2026, is based on a market environment that has changed fundamentally since the rules were agreed upon in 2022.
The push, spearheaded by groups like the International Institute of Finance and the Global Blockchain Business Council, comes as the crypto market shows signs of both maturity and continued volatility. As of this week, Bitcoin's price has pulled back, trading near $113,000 after hitting a recent high above $124,000 (Source: The Economic Times). This recent market action is being driven by a combination of factors, including profit-taking and shifting macroeconomic signals, underscoring the very volatility that regulators cite as a key risk.
However, the industry argues that the current rules, which impose a steep 1,250% risk weight on unbacked crypto assets like Bitcoin, are overly punitive and make it "uneconomical for banks to meaningfully participate" (Source: PYMNTS.com). They warn that this approach could push crypto activity outside the regulated banking sector, hindering crucial oversight and consumer protection. Instead, they propose a "re-design and re-calibration" of the standards to better reflect the current risk profiles of digital assets, including regulated stablecoins.
This regulatory standoff highlights a broader tug-of-war over the future of financial markets. As major banks like JPMorgan Chase & Co. explore everything from crypto custody to stablecoin issuance, they seek a clear, risk-appropriate framework that allows them to compete. The lobbying groups' letter, submitted just yesterday (Source: Mint), is a direct challenge to the Basel Committee's authority as the "primary global standard setter for the prudential regulation of banks." With U.S. regulators taking a "different look" at crypto, the industry is betting on a new political and economic reality to force a change in the global regulatory roadmap. All eyes are now on the Basel Committee as it weighs its response, a decision that will significantly impact the trajectory of digital asset adoption by traditional finance.
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