Ten industry bodies representing incumbent institutions and blockchain firms have written to the Basel Committee on Banking Supervision (BCBS) requesting that it revisit its standard for the treatment of crypto-assets. The biggest complaint relates to the Basel Committee’s classification of any tokenized assets issued on permissionless blockchains as high risk, with prohibitive bank capital requirements.
The ten associations (full list below) include seven representing incumbents such as the Institute of International Finance (IIF), Global Financial Markets Association (GFMA), International Capital Market Association as well as three representing blockchain firms including Global Digital Finance.
As context, the Committee finalized the standard at the end of 2022, and opened another consultation a year later. As part of that consultation, the BCBS expressed the view that banks cannot address the risks posed by permissionless blockchains, hence any tokenized securities issued on permissionless blockchains would be classified as having the same risk as cryptocurrencies. The capital required to hold cryptocurrencies makes it prohibitive for banks to hold any unless they are hedged.
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