Global banks may soon adopt a more favorable stance towards cryptocurrencies as the Basel Committee on Banking Supervision (BCBS) prepares to revise its influential guidance on crypto exposure, according to a Bloomberg report.
Sources familiar with the matter indicate that the Basel Committee's 2022 guidance concerning banks' treatment of crypto assets is slated for an update next year. This revision aims to create a more accommodating framework, a departure from the 2022 standards which most banks interpreted as a directive to avoid cryptocurrency exposure altogether.
The Basel Committee has reportedly discussed the suitability of its previous rules, which have not yet been fully implemented by major financial jurisdictions like the United States, the United Kingdom, and the European Union.
The impetus for new regulations stems from the significant growth of stablecoins, a sector recently subject to regulation in the US through the GENIUS Act, which now permits their use in payment systems.
Under the current Basel framework, stablecoins issued on public blockchains are subjected to the same capital charges as higher-risk assets, such as Bitcoin (BTC) and Ether (ETH). This classification has faced criticism from market participants who contend that regulated, asset-backed stablecoins represent substantially lower risks.
The Basel Committee's Role in Global Financial Stability
The Basel Committee operates as a global standard-setting body for bank regulation, with a primary focus on capital adequacy, risk management, and supervision. Its established rules, including Basel III, are designed to ensure the stability and resilience of banks worldwide, thereby mitigating the risk of global financial crises.
These developments follow comments made by Chris Perkins, president of investment firm CoinFund, in mid-August. Perkins asserted that the capital requirements for banks established by the Basel Committee act as a "chokepoint" intended to impede the crypto industry's expansion. He elaborated at the time:
“It’s a very nuanced way of suppressing activity by making it so expensive for the bank to do activities that they’re just like, ‘I can’t.’”
According to the report, some countries, including the US, are proactively reviewing these standards to stay ahead of their implementation. Conversely, other nations prefer to adopt the current standards first and then conduct reviews at a later stage.
The European Union's Markets in Crypto-Assets Regulation (MiCA) framework already provides stablecoins with capital treatment equivalent to their underlying assets, which typically consist of cash and cash equivalents.