As Bloomberg reported, the Basel Committee on Banking Supervision (BCBS) is preparing to revise its 2022 guidelines on banks' crypto risk. The planned update will make the foundations more workable for banks that need to cope with stablecoins and other digital assets but faced high capital costs under the previous framework. The 2022 standards have been interpreted by many banks as a signal to avoid crypto. Several jurisdictions, including the United States, the United Kingdom and the European Union, haven’t yet fully implemented these rules, so the Committee is reviewing them before they develop into final.
The revision comes amid the rise of regulated asset-backed stablecoins now eligible for payments within the US under the GENIUS Act. According to the present Basel text, stablecoins issued on public blockchains fall into the identical capital range as high volatility assets comparable to Bitcoin BTC 109,983 and Ether ETH 3,859. Market participants said this treatment doesn’t reflect the lower risk profile of stablecoins backed by money or money equivalents.
Basel Committee Tower. Source: Wikimedia Commons
The stablecoin rules are considered too strict to be used as a way of payment
Bloomberg reported that BCBS members recently reopened the 2022 rules to see in the event that they still fit the present stablecoin market. They did this because payments stablecoins have expanded rapidly. Several national authorities now allow the usage of these stablecoins in regulated financial services. Basel standards shape national banking rules, so banks listen to them. If stablecoins remain in the identical high-risk group as speculative cryptocurrencies, banks will reduce their role on this space. This would keep stablecoin activity largely outside the banking system.
Under the present framework, banks must hold capital for such assets as in the event that they were high-risk assets. This makes banks’ involvement within the issuance, custody, settlement or settlement of stablecoins expensive. Industry players argued that this result’s inconsistent with jurisdictions that already apply risk-based treatment. For example, the EU Markets in Crypto Assets (MiCA) framework allows stablecoins to receive capital treatment linked to the standard of their backing, typically money and money equivalents.
The industry points to a significant “chokepoint” effect
The Bloomberg report followed earlier comments from Chris Perkins, president of CoinFund, who said in August that Basel capital requirements acted as a “throttle” for banks. He said:
“It's a really sophisticated way of stifling activity by making it so expensive for the bank to do activity that they simply say, 'I can't'.”
His description was consistent with the view of banks that desired to support tokenized or blockchain-based payment products but couldn’t justify the capital impact under the 2022 text. Since the foundations were broad, they covered each volatile tokens and controlled stablecoins.
Different jurisdictions weigh the timing
According to Bloomberg, some countries, including the US, need to update the Basel Committee's crypto standards before full domestic adoption. Others prefer to implement the present package and revise it later. In each cases, the Basel Committee stays the fundamental international standard setter for bank capital, risk management and supervision. Its rules, including Basel III, should not laws but are typically adopted by global banks as national regulators implement them.
If the revised text separates stablecoins with regulated reserves from uncollateralized cryptoassets, banks could have clearer conditions for holding, transferring or servicing them. The committee has not yet released the updated language.
