Global Trade Associations Call for Revisions to EU Cryptoasset Standard

A coalition of global financial trade associations has urged regulators to rethink upcoming crypto asset rules, warning they could restrict banks’ ability to operate in crypto markets.

The group, which includes the Securities Industry and Financial Markets Association, the Association for Financial Markets in Europe, and the Bank Policy Institute, has called on the Basel Committee on Banking Supervision to pause implementation and revise parts of its Cryptoasset Exposures Standard.

The standards, which were agreed upon in 2022, set out how banks should manage and disclose risks tied to crypto assets. However, the group argued that the framework is excessively conservative, unfairly tough on capital requirements, and contains inconsistencies with existing market risk practices.

Therefore, the trade associations have urged the Basel Committee on Banking Supervision to revise the cryptoasset standard so it better reflects real risk levels and allows for responsible innovation within regulation.

They argued that prudential rules should target the actual financial activity and risk, rather than the technology itself, warning that overly strict capital requirements could drive innovation outside regulation. They added that reforms must keep pace with the growth of DLT-based finance and evolving markets.

The group said that with clearer regulation, stronger technology platforms and greater institutional involvement, mass adoption of tokenization in capital markets becomes far more achievable.

The letter added: “Now is the time for coordinated action to harness the benefits of DLT, modernize financial infrastructure, and support sustained economic growth.”