A coalition of prominent finance industry bodies has issued a fervent plea to the Basel Committee on Banking Supervision (BCBS), urging a reconsideration of its impending regulatory standards for crypto assets. These standards, agreed upon in 2022, are slated to come into effect in January 2026. Still, industry leaders argue they are now outdated and excessively stringent, effectively barring banks from meaningful engagement in the crypto market.
In an open letter addressed to the BCBS, the signatory groups – including the Global Financial Markets Association, the Institute of International Finance, and the International Swaps and Derivatives Association, alongside several crypto industry groups – contend that the rapid transformation of the crypto landscape since 2022 has rendered the proposed regulations overly conservative. They highlight the significant growth and increasing interconnectedness of the crypto market with mainstream finance, arguing that the current framework fails to reflect this evolving reality adequately.
The letter specifically criticizes the “restrictive qualification standards” and “punitive market and credit risk capital treatments,” asserting that these provisions make participation in the crypto market economically unviable for banks. Consequently, the signatories call for a temporary suspension of the implementation to allow for a thorough reassessment and potential amendments to the regulations. The request encompasses the gathering of updated information and a comprehensive review of the existing framework in light of the market’s recent developments.
The Basel Committee, while lacking direct enforcement powers, wields significant influence over global banking practices. Its member institutions, comprising regulators and central banks from major financial centers, generally adopt its standards. While the Bank for International Settlements (BIS), the host organization of the BCBS, has yet to respond, the urgency of the industry’s concerns underscores the potential impact of these regulations on the future relationship between traditional finance and the burgeoning cryptocurrency sector. The 2022 crypto market collapse, although highlighting the need for regulation, shouldn’t overshadow the need for a framework that fosters innovation and responsible participation.
