Rules requiring global banks to hold extremely high capital buffers against potential losses on crypto assets must be revised after the US and UK declined to implement them, said Erik Thedéen, chair of the Basel Committee on Banking Supervision.

Regulators divided over next steps

Thedéen told the Financial Times that a new approach to regulating banks’ crypto exposures is needed, though this will be difficult due to diverging views among regulators.

Stablecoin boom pressures regulators

The rapid rise of stablecoins, marketed as safer digital assets but still subject to the Basel framework’s harshest treatment, has intensified calls—particularly from US banks—for a regulatory rethink.

“What has happened has been dramatic… this strong increase in stablecoins and how much assets are in that system calls for a different approach,” said Thedéen, who also serves as governor of Sweden’s central bank.

Risk-weighting under debate

The Basel Committee’s crypto rules, agreed three years ago and set to take effect on January 1, 2026, require banks to apply a 1,250% risk weight to highly volatile assets such as bitcoin, effectively demanding a dollar of capital for every dollar held.

A later amendment extended the strictest treatment to assets using permissionless blockchains, sweeping in most stablecoins and many other digital assets.

Banks warn rules are unworkable

Global banking associations warned in August that the rules make it nearly impossible for banks to participate meaningfully in crypto markets.

The US Federal Reserve has already said it will not implement the framework and wants it reconsidered. The Bank of England is also expected to reject the rules in their current form. The EU has implemented parts of the package but excluded permissionless ledgers and capital treatment for crypto assets.

Basel rethink now unavoidable

“It is clear that we need to look into it once again,” Thedéen said, adding that deeper changes will be challenging due to diverging positions within the committee. The debate unfolds as uncertainty grows around the broader Basel III package, whose implementation has also been delayed in the UK and EU.

Sources:

https://www.ft.com/content/a02072d6-2444-44e2-99b4-cfd427d90cc0

https://www.ft.com/content/3fe7be31-179a-47dd-9a61-8f4ea42b9c62

https://www.bis.org/bcbs/publ/d567.pdf

https://www.gfma.org/wp-content/uploads/2025/08/bcbs-prudential-letter-final-public-version.pdf