- Stablecoin growth is pushing regulators to rethink strict bank capital rules and update global oversight.
- The US and UK rejection of current Basel standards is driving a wider review of crypto risk treatment.
- Different regional policies are creating pressure for clearer rules that match the rising use of stablecoins.
The Basel Committee on Banking Supervision is rethinking its strict crypto capital requirements after strong resistance from the United States and the United Kingdom. The current framework places a 1,250% risk weighting on bank exposures to crypto assets. It also places the same burden on stablecoins. This approach has raised concerns because it does not reflect the rapid expansion of the stablecoin market.
Stablecoin Growth Exposes Limits in Current Crypto Capital Framework
Stablecoins now play a central role in global digital asset trading. They track real-world assets and support large daily transaction volumes. Their market value sits near $300 billion. This growth has increased pressure on regulators to update their approach.
However, the present rules were designed around volatile cryptocurrencies. They treated assets on permissionless blockchains as high-risk holdings. Banks were therefore required to hold capital equal to the full value of the crypto assets they manage. This included widely used stablecoins such as USDT and USDC. The aim was to limit exposure to extreme price swings. However, the stablecoin market now operates with different characteristics and more structured backing.
Major Economies Shape the Debate
Pushback from leading financial centers has influenced the committee’s current position. The US Federal Reserve signaled that it will not apply the rules in their existing form. It raised concerns about the practicality of some demands. The United Kingdom also plans a different approach. It wants to create its own rules for digital assets. Both positions increase pressure on Basel to revise its stance.
Regional differences now raise questions about consistent global standards. The European Union has adopted parts of the Basel crypto framework. However, it excluded several provisions involving permissionless networks. This divide creates a risk of uneven requirements across major markets. Banks that operate internationally may face complex compliance challenges.
Growing Role of Stablecoins Drives the Review
The rising importance of stablecoins in financial markets is driving the need for change. Regulators must respond faster as adoption grows. Many industry observers argue that stablecoins should not be grouped with speculative assets. They also note that risk levels vary across digital asset categories.
The Basel Committee has recognized the challenge of creating a unified framework. Different regions hold different views on digital asset risk. However, members aim to identify shared positions that support global stability. They also want rules that reflect modern market conditions. The review process may therefore lead to updated standards that align more closely with current crypto activity.
