šØ BASEL COMMITTEE CONFIRMS EXPEDITED REVIEW OF CRYPTO RULES šØ
The Basel Committee on Banking Supervision has officially agreed to expedite a review of its cryptoasset capital standards after the U.S. and U.K. refused to implement the current framework, which requires banks to hold dollar-for-dollar capital against crypto holdings. The Committee will fast-track a targeted review to address the "unworkable" treatment of stablecoins and other digital assets.
š Key Points
š¹ Expedited Review Confirmed: At its November 2025 meeting, the Basel Committee "agreed to expedite a review of targeted elements of the standard" for bank cryptoasset exposures. This follows months of industry pressure and regulatory pushback from major jurisdictions.
š¹ US & UK Rejection: The U.S. Federal Reserve's Vice Chair for Supervision Michelle Bowman called the rules "not very realistic," while the Bank of England declined to implement them in their current form. The Committee acknowledged that "a different approach is needed" due to these rejections.
š¹ Stablecoin Classification Problem: The current framework treats stablecoins as equivalent to the riskiest cryptocurrencies due to their issuance on permissionless blockchains, subjecting them to a punitive 1,250% risk weighting. Basel Committee Chair Erik ThedĆ©en stated: "This very strong increase in stablecoins... calls for a different approach".
š¹ Industry Pressure: In August 2025, a coalition of nine global financial trade associations representing the world's largest banks called for a pause and recalibration, arguing the rules are "too conservative and punitive" and "not in line with actual risks". The associations warned the capital requirements make it "uneconomical for banks to meaningfully participate" in crypto markets.
š” Why It Matters
š¹ Bank Participation Barrier: The 1,250% capital rule effectively required banks to hold $1 of capital for every $1 of crypto on their balance sheet. This made basic blockchain operationsālike holding ETH for gas feesāmathematically impossible, stifling institutional adoption and tokenization efforts.
š¹ Global Regulatory Fragmentation: With the US, UK, Singapore, EU, and Hong Kong all refusing to adopt the punitive stablecoin treatment, the Basel framework faced becoming irrelevant. The expedited review signals a shift from a "ban phase to a build phase," where banks seek regulatory clarity to use crypto as infrastructure rather than avoid it entirely.
š¹ Tokenization Acceleration: A recalibration could unlock bank participation in tokenized deposits, repo transactions, and other DTL-based financial services. The OCC's recent Interpretive Letter 1186 already clarified banks can custody crypto for "network execution fees," setting the stage for broader institutional blockchain adoption.
š¹ Market Stability vs. Innovation: The review must balance financial stability with innovation. While intended to protect banks from crypto volatility, the rules risked pushing activity into unregulated shadow banking. A more risk-sensitive framework could bring crypto activities within the regulatory perimeter, improving oversight.
The Basel Committee's decision to expedite its crypto rules review represents a pivotal moment for digital asset regulation, potentially clearing the path for banks to participate in the tokenized economy while maintaining appropriate safeguards. The outcome will shape whether traditional finance can compete with crypto-native firms in the next phase of financial infrastructure development.
https://www.ledgerinsights.com/basel-committee-chair-confirms-reviewing-crypto-rules-report/