Trade Groups Press Basel Committee to Rework Cryptoasset Standards
A group of global financial trade groups urged the Basel Committee on Banking Supervision ("BCBS") to pause implementation of the Cryptoasset Exposures Standard ("SCO60") and reconsider key provisions.
The letter, signed by several industry groups—including the Bank Policy Institute, Futures Industry Association, International Swaps and Derivatives Association, SIFMA, and others—argued that the current framework is overly punitive and risks driving crypto activity outside the banking sector. The groups stressed that the standard should be recalibrated to reflect recent market developments, expand technology neutrality, and support responsible innovation.
The associations offered several additional specific recommendations:
- Eliminating the Permissioned/Permissionless Distinction. The groups urged the BCBS to drop the current framework’s de facto exclusion of cryptoassets on public blockchains from Group 1 (tokens and stablecoins) treatment. The groups argued that prudential requirements should reflect the risk profile of the asset itself, not the ledger type. They also recommended removing the proposed infrastructure risk add-on, which they said duplicates existing prudential safeguards.
- Revising Settlement Finality Requirements. The groups called for amending "classification condition 2," which requires settlement finality to be demonstrated through "prescriptive ledger rules." Instead, they suggested a principles-based approach that allows banks to demonstrate settlement certainty through documented processes and applicable legal frameworks.
- Recognizing Regulated Stablecoins. The associations highlighted the need to distinguish between regulated and unregulated stablecoins. The groups argued that regulated stablecoins—backed by reserve assets and subject to oversight—should be treated as eligible financial collateral, consistent with their economic function.
- Allowing Group 2a Assets as Collateral. The groups recommended expanding the framework to permit recognition of certain Group 2a (unbacked cryptoassets that meet certain hedging requirements) as eligible collateral, provided they meet enforceability, liquidity, and legal certainty standards.
- Revising Treatment of Group 2 (unbacked) Cryptoassets. The groups proposed a series of targeted adjustments: (i) eliminate the 1–2% exposure cap on Group 2 holdings, which they argue discourages meaningful bank participation; (ii) update the hedging recognition test to account for the growing role of regulated spot exchanges; (iii) recalibrate the current 100% risk weight to more proportionate levels, suggesting 54% based on empirical data; and (iv) remove outdated "cross-tenor" and "cross-exchange" segmentation rules, replacing them with recognition of diversification benefits across Group 2a cryptoassets.
- Permitting Internal Models. The groups recommended allowing banks to apply internal models for market risk and counterparty risk to Group 2a assets, noting their growing liquidity, transparency, and availability of reliable data inputs.
The groups emphasized that these reforms would not weaken prudential safeguards, but would better align capital treatment with actual risks, enhance consistency across jurisdictions, and encourage responsible bank participation in crypto markets.