US Seeks Review of Basel Committee Rules on Banks’ Crypto Holdings

The Basel Committee’s rules on banks’ cryptocurrency holdings reportedly may be overhauled because of the rapid adoption of stablecoins.

The rules are set come into force next year, but the United States, the United Kingdom and the European Union have not committed to implementing them, and some are calling for the rules to be overhauled, Bloomberg reported Friday (Oct. 31).

Since the time the rules were developed in 2022, there has been a turnaround in the perception of crypto in the U.S., with the new administration embracing the technology, according to the report.

This has prompted debates at the Basel Committee on Banking Supervision over its upcoming rules, with the U.S. leading a drive to amend them, the report said.

One point of conflict is stablecoins. While stablecoins are now regulated in the U.S. under the recently adopted Genius Act and are now widely used for payments, the Basel standards still impose the same capital standards on them as they do on bitcoin, per the report.

That means the risk charge for holding stablecoins under the standards is 1,250% of the exposure, which is over three times higher than that for risky investments such as venture capital investments, the report said.

According to the report, some other countries agree with the U.S. that the standards should be reviewed before they are implemented, while the European Central Bank prefers to implement the standards as they are and then consider reviewing them later.

It was reported in August that several global financial trade associations were calling on the Basel Committee to reconsider the Crypto Asset Exposure Standard before it becomes effective.

The associations said at the time in a letter to the Committee that the standard’s capital treatment of crypto assets is excessively conservative and overly punitive, misaligned with actual risks and inconsistent with current market risk management practices.

“The prudential framework for those markets should not discourage participation by imposing overly punitive capital requirements that are inconsistent with actual risks,” the letter said. “If banks choose to participate, they should be able to do so within a technology-neutral framework that is proportionate and risk-sensitive.”

When the Genius Act was signed into law by President Donald Trump in July, PYMNTS reported that it gave stablecoins legal legitimacy, so long as they play by traditional financial rules of 1:1 reserve backing, anti-money laundering compliance and dual charter options through state or federal regulators.