US Pushes Basel to Rewrite Crypto Rules as Stablecoins Crash the Banking Gates

Global regulators are quietly rethinking the toughest capital rules ever drafted for crypto holdingsafter a surge in stablecoin adoption forced a policy U-turn led by the United States. The Basel Committee on Banking Supervision's framework, originally designed in 2022 to keep banks away from high-risk digital assets, was interpreted by many lenders as a warning shot. But with the White House now actively backing regulated stablecoins through the newly enacted Genius Act, that old Wild West narrative no longer fits. The debate now centers on whether Basel's heavy-handed standards still make sense in a market that looks increasingly mainstream.

At issue is the 1,250% risk charge Basel applies to so-called permissionless tokens like Circle's USDC and Tether's USDTassets pegged to real-world reserves but operating on public blockchains. US regulators argue that treating these the same as Bitcoin could be outdated, particularly as stablecoins gain traction in payments and settlement systems. Some global peers, including the Bank of England, are seeking alignment rather than confrontation, while the European Central Bank prefers to push ahead and review later. Officials at the Fed, ECB, and Basel Committee have declined to comment, underscoring the delicacy of the talks now underway.

Europe, meanwhile, has already charted a different course. Under its latest banking package, stablecoins can be capitalized in line with the quality of their backing assetstypically cash and short-term US government debt. The Bank of England plans to unveil its own regulatory blueprint this month, signaling support for a coordinated global approach. Elsewhere, Singapore has delayed implementation by a year to maintain alignment, and Hong Kong may relax requirements for licensed issuers ahead of its 2026 rollout. With Basel having already postponed its crypto rules once in 2024, another delayor even a full recalibrationcould be in play as regulators race to catch up with an industry that no longer fits its old definitions.