Basel Committee to Revise Crypto Exposure Guidance, Potentially Boosting Bank Adoption
Global banks may soon become more positive about cryptocurrencies as the Basel Committee on Banking Supervision (BCBS) prepares to revise its landmark guidance on crypto exposure. According to a Bloomberg report, the Basel Committee’s 2022 guidelines on banks’ treatment of cryptocurrencies will be updated next year to allow for a more favorable design. This follows the publication of previous standards in 2022, with most banks interpreting them as a signal to avoid cryptocurrencies altogether.
The need for new rules arises from the rapid growth of stablecoins, which were recently regulated in the USA by the GENIUS Act and are now approved for use in payments. Under the existing Basel rules, stablecoins issued on public blockchains are subject to the same capital requirements as riskier assets such as Bitcoin (BTC) or Ether (ETH). This equivalence has drawn criticism from market participants who argue that regulated, asset-backed stablecoins pose far lower risks.
The Basel Committee is a global body that sets international standards for banking regulation, focusing on capital adequacy, risk management and supervision. Its rules, such as Basel III, ensure that banks around the world remain stable and resilient and are believed to reduce the risk of global financial crises. The committee proposes the introduction of maturity limits for stablecoin reserve assets, which could lead to a more favorable treatment of stablecoins.
Industry Reaction and Regulatory Environment
Chris Perkins, president of investment firm CoinFund, previously stated that capital requirements for banks set by the Basel Committee were creating a “bottleneck” designed to stifle the growth of the crypto industry. He said: “It’s a very sophisticated way of stifling activity by making it so expensive for the bank to do activity that they just say, ‘I can’t’.” The EU framework for regulating crypto asset markets already allows stablecoins the same capital treatment as their backing, typically cash and cash equivalents.
The revision of the Basel Committee’s guidance on crypto exposure could potentially boost bank adoption of cryptocurrencies. As the regulatory environment continues to evolve, it is likely that we will see increased investment and innovation in the crypto industry. For more information on the Basel Committee’s review of bank crypto asset rules, visit https://cointelegraph.com/news/maybe-a-hed-like-basel-committee-reviews-bank-crypto-asset-rules-amid-stablecoin-surge?utm_source=rss_feed&utm_medium=rss_tag_regulation&utm_campaign=rss_partner_inbound
