Finance Industry Urges Regulators to Pause New Crypto Rules

TLDR

• Global banks urge delay of crypto rules, citing outdated 2022 framework.
• Trade groups call 2026 crypto rules harsh and want a data-driven overhaul.
• New crypto rules could stifle innovation, banks warn regulators.
• Basel’s crypto oversight under fire as banks push for balanced rules.
• Crypto maturity prompts banks to seek fairer capital requirement rules.

Leading global financial trade associations have asked regulators to delay new crypto-related banking rules set for 2026. These organizations argue that the rules are outdated and overly strict, given recent changes in the digital asset landscape. They are urging a review and recalibration of capital requirements tied to cryptocurrency exposure.

The proposed rules stem from 2022 decisions made during a period of widespread crypto turmoil and market volatility. They include high capital surcharges for banks holding unbacked digital assets such as Bitcoin.  Since then, market conditions have shifted, and institutional engagement with crypto has expanded significantly.

The associations stress that the framework no longer reflects current use cases for digital ledger technology. They believe the Basel Committee on Banking Supervision should reassess the standards to ensure proportional and relevant oversight. The request emphasizes the need for updated data and a more balanced regulatory approach.

Crypto Integration by Major Banks Raises Concerns

Major financial institutions have since entered the digital asset space with increased confidence and clarity. Banks like JPMorgan now offer services that include crypto custody, trading infrastructure, and stablecoin initiatives. These developments mark a shift from earlier skepticism by top executives toward cautious adoption.

New regulatory support for crypto in the United States has spurred more formal industry engagement. For instance, President Donald Trump signed legislation aimed at encouraging blockchain innovation and financial modernization. This shift has made the industry more mature and better aligned with existing financial systems.

Lobby groups argue that the rigid framework from 2022 could stifle innovation. They highlight the potential for unintended consequences if authorities apply outdated standards to an evolving industry. Therefore, they propose an informed, data-driven reevaluation instead of rushing implementation.

Regulators Receive Mixed Reactions Amid Global Divergence

The joint letter received support from global and regional trade bodies, including the International Institute of Finance and the International Swaps and Derivatives Association. These organizations collectively warned that inconsistent implementation across jurisdictions could fragment global markets. They insist that any global standard must be both fair and enforceable to avoid regulatory arbitrage.

The Basel Committee has not issued a formal response to the lobbying effort. US Federal Reserve officials suggested they may depart from the international framework. In an interview, Vice Chair Michelle Bowman indicated that discussions on the topic would continue throughout the year.

National regulators are also reportedly reconsidering their readiness to adopt the framework in full. A supervisor from one country noted uncertainty about enforcing the 2026 rules. This highlights the potential for divergence and confusion without a coordinated update to the regulatory timeline.

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