Global banks might soon adopt a more positive stance on cryptocurrencies as the Basel Committee on Banking Supervision (BCBS) is set to revise its pivotal guidance on crypto exposure, according to a Bloomberg report released on Friday.
As per Bloomberg, citing sources familiar with the issue, the Basel Committee’s 2022 guidance regarding banks’ handling of crypto assets will be revised next year to take a more favorable approach. This update follows the initial standards from 2022, which many banks interpreted as a directive to steer clear of crypto activities entirely.
Sources from Bloomberg indicated that the Basel Committee has recently engaged in discussions about the suitability of the former regulations, which have not yet been fully adopted by the United States, the United Kingdom, and the European Union.
The necessity for new regulations stems from the swift expansion of stablecoins, recently regulated in the US through the GENIUS Act, now authorized for payment transactions.
Currently, Basel rules classify stablecoins issued on public blockchains with the same capital requirements as more volatile assets, such as Bitcoin (BTC) or Ether (ETH). This equivalence has faced backlash from market stakeholders who assert that regulated, asset-backed stablecoins carry significantly lower risks.
A powerful standard-setting body
The Basel Committee serves as a global entity that establishes international regulations for banking, emphasizing capital adequacy, risk management, and oversight. Its guidelines, including Basel III, aim to maintain the stability and resilience of banks worldwide, thereby mitigating the risk of international financial crises.
Related: Basel Committee proposes introducing maturity limits for stablecoin reserve assets
The remarks come after Chris Perkins, president of investment firm CoinFund, stated in mid-August that the capital requirements imposed by the Basel Committee create a “chokepoint” intended to stifle the expansion of the crypto sector. He asserted at that 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.’”
Related: Basel Committee finalizes crypto exposure regulations for banks
The report indicates that some nations aim to get ahead of the curve and reassess the standards prior to their implementation, such as the US. Conversely, other countries prefer to apply the current standards and evaluate them afterward.
The EU’s Markets in Crypto-Assets Regulation framework currently enables stablecoins to receive the same capital treatment as their underlying assets, usually cash and cash equivalents.
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