Basel’s ‘Brutal’ Crypto Capital Rule Faces Overhaul After US, UK Revolt
A punitive global rule for bank crypto holdings is on the brink of being rewritten. The Basel Committee is being forced to dismantle its own stringent framework after the United States and United Kingdom refused to enforce it, breaking ranks with the international regulatory consensus.
The rule in question—a 1,250% risk weight—has been described as “brutal” by critics. It mandates that for every $1 of crypto on its books, a bank must hold $1 in capital, effectively making it unviable for traditional finance to engage with the asset class.
Now, with the landscape transformed by the rise of stablecoins, Basel Chair Erik Thedéen admits the approach is no longer tenable. “What has happened has been fairly dramatic,” Thedéen told the FT, conceding that the committee must now quickly find a “different way” to regulate the market or risk irrelevance.
