Basel Committee Bias: Permissioned Stablecoins Favored in Revised Crypto Asset Standard
The Basel Committee, known for establishing bank regulations, has recently revised its standard for crypto assets, leading to concerns about the future of stablecoins. The updated standard appears to favor permissioned stablecoins, like JPM Coin, which operate on private blockchains, while penalizing stablecoins such as USDT and USDC that utilize public blockchains. This move has drawn criticism from members of the crypto community, who accuse the committee of attempting to manipulate the tokenized cash market.
The amended standard introduces regulatory advantages for stablecoins issued on permissioned blockchains. For instance, JPM Coin, a stablecoin developed by JP Morgan on its own blockchain, would receive treatment consistent with the “Group 1b” classification, subject to capital requirements based on the risk weights of underlying exposures outlined in the existing Basel Framework. On the other hand, stablecoins like USDT and USDC would fall under the “Group 2” classification, subject to conservative capital treatment that limits banks’ exposure.
The changes made to the original standard have been met with criticism. Austin Campbell, the founder of Zero Knowledge Consulting, accused the Bank for International Settlements (BIS) of attempting to manipulate the tokenized cash market for the benefit of banks. He suggested that institutional asset managers, insurance companies, and payment companies should consider creating their own stablecoins instead of relying on banks. Caitlin Long from Custodia Bank also criticized the regressive nature of these amendments, highlighting that the BIS is leading the U.S. on crypto but is now moving backwards.
These revised standards are scheduled to be implemented on January 1, 2026. The Basel Committee’s treatment of public stablecoins in its updated crypto asset standard has sparked a debate within the industry. Share your thoughts on this issue in the comments section below.
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