Finance Groups Urge Revisions to Basel Crypto Standards

• Industry bodies ask regulators to reassess 2026 crypto rules, citing market evolution and concerns over banks’ limited access to digital assets.

Pushback Against Basel’s Crypto Framework

A coalition of financial industry associations has formally requested the Basel Committee on Banking Supervision to reconsider its upcoming cryptoasset standards. These rules, set to take effect in January 2026, outline how banks should manage and disclose risks related to digital assets. Critics argue that the framework, developed in 2022, no longer reflects the current state of the crypto market. Rapid growth and deeper integration with traditional finance have shifted the landscape considerably.

The open letter, signed by groups including the Global Financial Markets Association and the Institute of International Finance, calls for a temporary pause in implementation. It suggests that the standards are overly conservative and could hinder banks from participating meaningfully in crypto markets. U.S. regulatory changes have already made it easier for banks to engage with digital assets, creating a mismatch with Basel’s approach. Industry representatives warn that without adjustments, the rules may push crypto activity outside the regulated banking sector.

Concerns Over Capital Requirements and Market Access

Under the Basel framework, banks face strict capital charges for holding cryptoassets, with some tokens assigned a 1,250% risk weight—far higher than traditional financial instruments like corporate bonds. These requirements, combined with narrow qualification criteria, make it economically unfeasible for banks to expand into crypto. The letter emphasizes that such punitive treatment could isolate banks from a $2.8 trillion market, reducing their ability to innovate and compete. Institutions are also limited to holding no more than 1% of their Tier 1 capital in certain crypto categories.

The Basel Committee, while lacking enforcement powers, influences global banking regulation through its member jurisdictions. Its standards are typically adopted by central banks and regulators across major financial centers. Despite feedback from the financial sector, the Committee has maintained its position, citing the need for robust safeguards. The Bank for International Settlements, which hosts the Committee, has not yet responded to the latest industry concerns.

Evolving Market Conditions and Regulatory Shifts

Since the original standards were drafted, the crypto market has undergone significant changes. Prices have surged, and digital assets have become more intertwined with mainstream financial systems. High-profile failures in 2022, such as the collapse of Terra/Luna, prompted calls for tighter oversight, but also revealed gaps in existing frameworks. Industry groups argue that current policy approaches are more nuanced and better informed than they were three years ago.

In the United States, regulators have adopted a more permissive stance, with President Donald Trump supporting pro-crypto initiatives. The Securities and Exchange Commission has signaled a shift in its interpretation of token classification, suggesting that only a small fraction may qualify as securities. These developments reflect a broader trend toward clearer and more flexible regulation. Financial institutions are keen to align global standards with these evolving realities to avoid fragmentation and uncertainty.