Banks Urge Basel to Delay 2026 Crypto Rules

Global finance industry groups are pressing the Basel Committee on Banking Supervision to delay the implementation of strict new rules governing banks’ exposure to cryptoassets. The standards, finalised in 2022, are due to take effect in January 2026 but are now facing growing opposition from banks and trade associations who argue that the framework is outdated and could stifle market participation.

In a joint letter released this week, organisations including the Global Financial Markets Association (GFMA), the Institute of International Finance (IIF) and the International Swaps and Derivatives Association (ISDA) called on regulators to reconsider. They argue that the “restrictive qualification standards” embedded in the rules would make it “uneconomical for banks to meaningfully participate in the cryptoasset market”.

The rules were designed following a series of high-profile collapses in the crypto sector, most notably the 2022 failure of FTX, and are intended to protect banks from excessive risk. They include a one size fits all approach to capital requirements, which the signatories say fails to reflect the diversification and maturity of today’s crypto market.

Global Rules, UK Implications

Although the Basel Committee sets global prudential standards, national regulators decide how to implement them. The UK, as a major financial centre, is expected to align with Basel’s framework, meaning the final decision will have significant implications for UK-based banks and their ability to engage with digital assets.

The Financial Conduct Authority (FCA) has already taken steps to strengthen the domestic regulatory environment. Earlier this year the watchdog launched consultations on stablecoin issuance and crypto custody services, alongside proposals to ban the purchase of crypto with borrowed funds. The UK Treasury has also signalled that a comprehensive framework for digital assets is expected to be phased in by 2026, mirroring international developments.

For British banks, alignment with the Basel standards could determine whether they expand cautiously into crypto services or step back entirely. Industry bodies warn that if the rules are too restrictive, the banking sector could be sidelined, leaving crypto activities concentrated among less regulated firms.

Industry Push for Revision

The open letter argues that the Basel framework should be updated to reflect changes in the sector, such as the introduction of regulated stablecoins, the expansion of institutional custody solutions, and growing demand from corporate clients. A more flexible approach, they suggest, would allow banks to manage risk effectively while still engaging with innovation.

Whether the Basel Committee will heed these concerns remains uncertain. Regulators have maintained that crypto remains highly volatile, and exposure must be tightly managed to avoid systemic risks. However, with financial institutions and industry groups united in their call, pressure is mounting for a delay or revision before the 2026 deadline.

Conclusion

The debate over Basel’s crypto standards underscores the tension between safeguarding the financial system and supporting innovation. For the UK, where policymakers are working to position the country as a global hub for digital finance, the outcome could shape how banks participate in the sector over the coming decade.