Wall Street Trade Groups Demand Basel Crypto Capital Rules Overhaul
Several Wall Street trade groups, including SIFMA, ISDA and FIA, have urged the Basel Committee on Banking Supervision to revise its proposed Basel crypto standards under the Basel III framework. The groups argue that the Committee’s plan to impose a 1,250% risk weight on banks’ crypto exposures would effectively block banks from offering custodial and trading services. They propose calibrating risk weights more proportionally, for example, setting a 250% weight for uncollateralized exposures to major cryptocurrencies like Bitcoin and Ether. The trade associations also seek clearer guidance on external reference exposures, risk-weight floors and treatment of stablecoins. SIFMA president Kenneth Bentsen warned that overly punitive Basel crypto standards could push crypto business away from regulated institutions. ISDA CEO Scott O’Malia criticized the departure from a risk-based approach. The groups argue that balanced Basel crypto standards could support banks’ participation in digital asset markets without exposing them to excessive risk.
Bullish
The call by major Wall Street groups to recalibrate Basel crypto standards is likely bullish for the crypto market. Should the Basel Committee soften its 1,250% risk weight proposal, banks would face lower capital costs and become more willing to offer custody, trading and lending services for digital assets. Enhanced bank participation can boost liquidity and institutional adoption, driving trading volumes and potentially prices. Historically, regulatory clarifications that facilitate bank involvement—such as OCC guidance on crypto custody—have led to market rallies. While final rulemaking may take time, the industry push suggests growing consensus for balanced rules that support market stability and growth, favoring a bullish outlook.