Finance groups call for pause on crypto standards they say risk shutting banks out of digital assets
Global finance industry groups are pressing regulators to pause new crypto banking standards that they argue will make it uneconomical for banks to participate in the market, according to Reuters.
The Basel Committee on Banking Supervision agreed in 2022 to introduce strict rules on how banks manage and disclose their crypto exposure, with implementation scheduled for January 2026.
The rules include steep capital surcharges for banks that hold cryptocurrencies, Bloomberg reported.
In a joint letter, the Global Financial Markets Association, the Institute of International Finance, the International Swaps and Derivatives Association, the Global Blockchain Business Council, and regional associations from the US, Europe, and Asia called for a “temporary pause” in the rollout.
The groups said regulators should “seek updated information” on the use of distributed ledger technology and consider “any appropriate redesign and recalibration” of the standards.
“The Cryptoasset Standard’s restrictive qualification standards, combined with otherwise punitive market and credit risk capital treatments, effectively make it uneconomical for banks to meaningfully participate in the cryptoasset market,” the letter stated, as reported by Reuters.
The associations also warned in their letter that inconsistent implementation “will jeopardize the goal of establishing a minimum standard that enables a level playing field, mitigates cross-border risk spillovers and prevents market fragmentation,” Bloomberg noted.
The debate comes as the crypto sector has grown rapidly and become more connected to financial markets, with cryptocurrency prices hitting record highs.
Banks are also responding to a shift in the US, where US President Donald Trump has backed a pro-crypto approach.
As per Reuters, regulators there have eased restrictions on banks’ involvement in digital assets, and institutions such as JPMorgan are expanding into custody, trading facilitation, and stablecoin issuance.
Michelle Bowman, the Federal Reserve’s vice chair for supervision and a member of the Basel Committee’s governing body, told Bloomberg TV that discussions on the new standards would continue throughout the year.
She added that US regulators are taking a “different look” at crypto than the international framework.
Bowman also argued in prepared remarks at a Wyoming crypto conference, as reported by Reuters, that Federal Reserve staff should be permitted small holdings of digital assets.
She said allowing “de minimus” ownership could strengthen recruitment and give examiners practical understanding of crypto products. “There’s no replacement for experimenting and understanding how that ownership and transfer process flows,” she said.
Bowman further cautioned against what she described as an “overly cautious mindset” among regulators.
“We must choose whether to embrace the change and help shape a framework that will be reliable and durable … or to stand still and allow new technology to bypass the traditional banking system altogether,” she said.
The Basel Committee itself has no enforcement powers, but its members typically apply agreed standards to international banks in their jurisdictions.
The Bank for International Settlements, where the committee is based, did not respond to requests for comment, Reuters noted.
The standards were initially drafted following a series of crypto company collapses in 2022 that left millions of investors facing losses and exposed misconduct across the industry, Reuters reported.
