The global standard-setter for banking regulation has effectively admitted that its hard-won cryptocurrency standards are obsolete before they have even come into force.
Basel Admits Defeat: Crypto Rules "Already Out of Date"
20 November 2025 - 12:30 CET
By Stu Clelland
In a stark concession to market reality, Basel Committee on Banking Supervision Chair Erik Thedéen acknowledged to the Financial Times that the regulator is struggling to keep pace with the sector, particularly regarding stablecoins. The admission comes as the US and UK openly rebel against the framework, threatening to fracture the global regulatory consensus.
The rules, agreed just three years ago and scheduled for implementation in early 2026, are now in limbo. As it stands, the framework places digital assets in the most restrictive regulatory bucket, assigning them a punitive risk weighting of 1,250%.
The capital trap
Under the current Basel text, banks are required to hold one dollar of capital for every dollar of crypto exposure on their books. This effectively lumps liquid, dollar-backed stablecoins into the same risk category as high-risk venture capital or toxic debt, making it economically unviable for major lenders to touch the asset class.
However, the market has moved faster than the bureaucrats. Stablecoins have surged in volume, with total supply jumping from $157bn to $231bn in the 12 months to April 2025, according to PwC.
With nearly all major stablecoins backed by US Treasury bills or cash, the 1,250% capital charge looks increasingly divorced from the actual risk profile.
The trans-Atlantic revolt
The Committee’s hand has been forced by a quiet rebellion from the world's two most critical financial jurisdictions. Both the US and the UK have refused to adopt the latest standards, effectively killing the global harmonisation that the Basel Committee exists to enforce.
Michelle Bowman, vice-chair for supervision at the US Federal Reserve, was blunt in her assessment at a Santander conference last month. "We are not adopting those Basel risk weights," she said. "They are actually not very realistic."
The EU and UK are now effectively in a holding pattern, waiting to see if the US will budge.
Reputation at risk
The pressure is now on the Committee to redraft the rules without losing face. Industry groups have already petitioned for a rethink, arguing that the regime should not "discourage participation" with "overly punitive" measures.
For Thedéen and the Committee, the stakes are higher than just crypto. Having already softened its stance on climate-related exposures following US pushback, a failure to update the crypto rules risks confirming that the Basel process is too slow and too rigid to govern modern finance.
