US and UK revolt forces Basel to rethink brutal crypto capital rules for banks

Global bank regulators are reassessing their stringent crypto rules due to significant pushback from the United States and the United Kingdom. The Basel Committee on Banking Supervision (BCBS) is reviewing the current 1,250% capital charge for crypto exposures, a requirement that mandates banks to hold funds equal to their crypto-asset exposure. Erik Thedéen, chair of the BCBS, noted that the rapid rise of regulated stablecoins has changed the regulatory landscape and suggests a need for a different approach. Both the US Federal Reserve and the Bank of England have expressed intentions not to implement these rules in their current form, labeling the capital requirements as unrealistic. This divergence from the existing Basel framework, which has been only partially implemented by the EU, raises concerns about competitive inequality in the global banking sector. In light of the unfolding stablecoin boom and differing national approaches, regulators must tackle the complexities of stablecoin risks and the potential for a more flexible regulatory framework.

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