Banks Push Back on Stricter Crypto Rules

Banking Sector Calls for Crypto Regulation Rethink

Major financial institutions are lobbying for a pause and reassessment of the Basel Committee's proposed regulations on banks' cryptocurrency activities.

Key Concerns:

• Onerous Capital Requirements: Banks argue that the steep capital surcharges for holding cryptocurrencies are excessively burdensome.
• Evolving Crypto Landscape: They claim the regulatory framework, agreed upon in 2022, doesn't reflect the current state of the crypto market, which has become more integrated with mainstream finance.
• Inconsistent Implementation: Concerns exist that different jurisdictions may interpret and implement the rules inconsistently, creating an uneven playing field.

Industry Arguments:

The financial lobbying groups contend that regulators need to gather updated information on the current use cases of blockchain technology and digital assets. They suggest that the existing standards should be redesigned and recalibrated to better reflect the current market environment.

• Mainstream Adoption: Banks like JPMorgan Chase are now actively involved in crypto-related services, including custody, trading facilitation, and stablecoin issuance.
• US Support: President Trump has supported legislation to advance the cryptocurrency industry in the United States.

Regulatory Response:

Michelle Bowman, the Federal Reserve's vice chair for supervision, has acknowledged that US authorities are taking a "different look" at crypto compared to the internationally agreed-upon approach. The upcoming standards may prove contentious, as the market dynamics have shifted considerably since the rules were initially conceived.

Key Takeaways:

• Banks are pushing back against strict crypto regulations set to be implemented in 2026.
• They argue the rules are outdated and don't reflect the current crypto landscape.
• Inconsistent global implementation is a major concern for the industry.