Basel Chair Calls for Reworking Bank Capital Rules on Cryptocurrencies Amid Global Hesitation
Erik Thedéen, Chair of the Basel Committee, has stated that the capital rules governing banks holding cryptocurrencies need to be reworked with a fresh approach. The current Basel framework, proposed in 2021 and initially set to come into force at the beginning of next year, has faced criticism and reluctance from major financial authorities including the U.S. Federal Reserve and the Bank of England.
The rules, which encompass stablecoins in addition to cryptocurrencies like Bitcoin and Ether, have been deemed unrealistic by officials such as Michelle Bowman, U.S. Federal Reserve vice-chair of supervision. Similarly, the Bank of England has decided against implementing the framework in its present form.
The Basel Committee, operating under the Bank for International Settlements as the global standard-setter for bank prudential regulation, has shifted its focus this year from bitcoins to stablecoins due to the latter's rising use. Thedéen emphasized the urgency to rethink the regulatory framework in response to the broader adoption of stablecoins and the evolving landscape of cryptocurrencies globally.
