Regulators around the world are discussing possible adjustments to rules regarding banks’ holdings of cryptocurrencies. The talks prompted a U.S.-led response to current regulations in response to increased adoption of stablecoins. The new changes are expected to take effect next year.
Regarding the initial regulations, sources noted that the Basel Committee on Banking Supervision set these standards at the end of 2022. According to the views of senior financial officials: Banks saw these rules as a barrier to exposure to crypto assets. Because such assets require a large amount of capital.
Since then, the perspective on cryptocurrencies has changed significantly. Today, what U.S. regulators once considered the “wild west” of the financial industry has evolved into one that attracts significant support from the White House.
Crypto community raises concerns over current crypto rules
The changing perspective on cryptocurrencies has sparked debate at the Basel Committee, raising questions about whether current regulations remain appropriate for digital assets. However, reports from reliable sources highlight that major jurisdictions around the world, such as the US, UK, and EU, have not yet decided to implement these rules on time.
U.S. officials insist they are at the forefront of calling for changes because they believe these standards are not aligned with the evolving needs of the industry, particularly with respect to stablecoins, according to people close to the situation.
The officials’ statement marks an important milestone for the cryptocurrency industry, as stablecoins are now regulated in the United States following the approval of the GENIUS Act. This movement has increased the adoption of cryptocurrencies as a means of payment around the world.
Still, the Basel standards impose high capital fees on non-permissioned stablecoins, such as Tether’s USDT and Circle’s USDC. These tokens operate on a public blockchain network open to everyone, similar to the principle that assets like Bitcoin operate on.
According to these standards, holding unauthorized crypto assets will result in a risk charge of approximately 1,250% of the exposure. Analysts commented that this interest rate exceeds the interest rate charged on other risk investments. For example, certain venture capital investments in the latest Basel Capital package come with a 400% fee.
After careful consideration, some countries supported the views of their officials and emphasized that they would reassess these standards before they are widely adopted.
Meanwhile, European Central Bank (ECB) executives share the idea of implementing current regulations first and then considering adjustments. Reporters requested comment from representatives of the Basel Committee, the Federal Reserve, and the ECB, but each representative declined to respond.
Banks seek regulatory consistency in cryptocurrency rules
The EU has established a cryptocurrency framework through its recent bank capital policy. This framework allows stablecoins to benefit from the same capital treatment as the assets backing them.
To maintain stability in value, stablecoins rely on reserves, typically consisting of cash and U.S. Treasury bills. Meanwhile, the Bank of England aims to implement new rules for stablecoins later this month. The bank also revealed that its team is developing guidelines for the management of crypto assets and is consulting with other jurisdictions to ensure uniformity in these regulations.
Meanwhile, Singapore announced earlier this month that it would delay its schedule by a year to meet global standards. Hong Kong has also announced plans to announce new rules in 2026, but recently proposed relaxing requirements for licensed stablecoins.
Discover more from Earlybirds Invest
Subscribe to get the latest posts sent to your email.
