Crypto Banking Rules Could Be Modified if Market Reacts, Basel Committee Chair Says

Controversial rules unveiled last year would discourage banks from holding assets such as bitcoin that are deemed risky

AccessTimeIconMar 28, 2023 at 2:57 p.m. UTC
Updated Mar 28, 2023 at 6:06 p.m. UTC

International standards intended to limit banks’ crypto holdings could be revised depending on the market reaction, the chair of an influential committee of standard setters said on Tuesday.

New capital rules requiring banks to treat unbacked crypto assets like bitcoin (BTC) as the riskiest kind of asset should be in effect by January 2025, said Pablo Hernández de Cos, who chairs the Basel Committee on Banking Supervision.

The Basel Committee finalized its rules in December despite protests from traditional finance firms who complained that plans to cap banks’ crypto holdings could limit innovation in distributed-ledger technology.

Those rules could be modified if they turn out to have a knock-on impact on finance, the Spanish central banker said at an event hosted by the Bank for International Settlements.

“Since we know that is market is evolving, what we will be doing with this standard is to focus on certain elements that might be particularly exposed to changes in the market,” Hernández de Cos said. “We should be prepared to modify the standard if needed, to try to cover the potential endogenous response of the market.”

Hernández de Cos said the committee would be monitoring implementation of the rules. Major jurisdictions that are members of the committee are supposed to put them in place in just under two years’ time, and lawmakers in some places such as the European Union have already made moves to do so.

In the U.S., crypto specialist banks Silvergate and Signature have both collapsed over the past few weeks.

The rules were “about indirectly trying to eliminate the potential risk that crypto markets might pose to other markets,” Hernández de Cos said. “There might be potential spillover effects from crypto to the banking sector.”

Edited by Stephen Alpher.


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Jack Schickler

Jack Schickler was a CoinDesk reporter focused on crypto regulations, based in Brussels, Belgium. He doesn’t own any crypto.