Delay in Basel Regulations for Crypto Assets
In a significant development for the banking sector, the Monetary Authority of Singapore (MAS) has announced a delay in the enforcement of the Basel Committee’s regulations concerning crypto assets, moving the deadline from January 1, 2026, to January 1, 2027. This decision aims to provide banking institutions with additional time to adapt to the new capital requirements associated with the Basel framework for cryptocurrencies. The MAS made this announcement following substantial feedback from various stakeholders, including major industry players, that raised concerns over the impending regulations.
Industry Feedback and Concerns
According to a report published by Caixin media, feedback was solicited from 13 respondents connected with the financial and Web3 sectors, including input from stablecoin issuer Circle. The feedback highlighted worries among industry participants about the potential for “regulatory arbitrage,” where companies might exploit transitional regulatory inconsistencies to minimize their costs or evade unfavorable rules if the regulations were to go into effect as scheduled.
Global Context and Comparisons
In light of this feedback, the MAS has concluded that a longer preparation period is necessary for banks to comply with the Basel Committee’s global standards governing crypto asset exposure. This postponement aligns Singapore’s approach with that of other global jurisdictions that are progressing at different paces. For instance, Hong Kong has already put into motion similar capital requirements based on the Basel guidelines and plans to implement them starting January 2026.
On a different front, the European Union has entered the implementation phase of the Basel revised crypto standards through its Capital Requirements Regulation III (CRR3) package, which took effect on January 1, 2025. Notably, while certain EU countries are moving forward, some components of this regulatory framework, such as the Market Risk Framework, face delays until January 1, 2026. Switzerland, on the other hand, has also decided to postpone the adoption of the Basel crypto standards, with industry advocates like the Swiss Blockchain Federation expressing concerns about compatibility with the nation’s blockchain development goals.
Overview of the Basel Framework
The Basel Committee, which rolled out its framework in mid-2022, titled “Prudential Treatment of Cryptoasset Exposures,” is rooted in earlier guidelines set in 2021. It categorizes crypto assets into two groups to tailor risk weights accordingly—Group 1, encompassing tokenized assets with stable values, and Group 2, which includes purely speculative cryptocurrencies like Bitcoin and Ethereum. These classifications feature risk weights ranging from 250% for Group 1b to a staggering 1,250% for Group 2b assets that do not meet the stipulated recognition criteria.
Overall, the intention behind the Basel framework is to establish consistent international standards ensuring robust capital requirements to mitigate the financial risks posed by crypto market volatility as traditional banks engage more with digital assets.
