Major Banks in Opposition to Strict New Rules for Crypto Holdings

Several major banks in the United States and Europe are opposing a set of strict rules targeting crypto holdings. Among these are JPMorgan Chase and Deutsche Bank. Their grievance is that they might have to set aside a dollar in capital for every dollar of BTC they hold.

A group of global central bankers and regulators known as the Basel Committee for Banking Supervision proposed these rules in June. However, the Global Financial Markets Association countered that with a letter published this week. The association, which includes JPMorgan and Deutsche in addition to five industry associations, questioned the strict capital requirements imposed on Bitcoin. They further argue that these rules would inhibit them from holding crypto assets. The resultant effect would see unregulated markets assume control of most crypto activities. An official statement issued by the Global Financial Markets Association goes thus:

“We find the proposals in the consultation to be so overly conservative and simplistic that they, in effect, would preclude bank involvement in crypto asset markets,”

However, according to banking regulators, this new regulatory check is necessary. They cite several financial improprieties facilitated by the crypto space as the reason for this. These include money laundering and terrorism financing. Upon the initial proposal of the rules in June, the Basel Committee suggested that banks apply a 1,250% risk weight to Bitcoin. The aforementioned committee includes the Federal Reserve, the European Central Bank, and other major central banks.

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