Basel Reconsiders the 1,250% Risk Weight for Cryptoassets Amid U.S. and U.K. Pushback

Basel reconsiders the 1,250% risk weight for cryptoassets amid U.S. and U.K. pushback. In particular, banking supervisors have revisited the Basel Committee’s strictest crypto standards after the U.S. and the U.K. declined to implement them as written. According to the Financial Times, committee chair Erik Thedéen acknowledges the need for a "different approach" to applying the 1,250% risk weight to crypto exposures and calls for an accelerated review given the sharp growth of regulated stablecoins.

"What has happened has been fairly dramatic."

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What 1,250% Risk Weight Means and Why It Is Contested

The current setting treats crypto exposures as the highest risk. For a bank, this is effectively equivalent to holding common equity at least equal to the exposure amount, which virtually eliminates the economic incentive to keep such assets on the balance sheet. The same bucket captures assets on permissionless blockchains, including stablecoins like USDT and USDC, because the rule does not differentiate them by issuance regime and risk management. Such a flat scale equates crypto to venture investments in terms of capital load and removes banks’ incentives to build custody, clearing, and settlement in tokenized form, even with full KYC and collateral management. Thedéen underscores that parameters for stablecoins require separate adjustments:

"We need to start analysing. But we need to be fairly quick on it."

Signals from key jurisdictions diverge. U.S. regulators signal they do not intend to adopt the current version of the rule without adjustments, and the Bank of England is likewise not adopting the framework unchanged. At the same time, the European Union is applying the standard partially, excluding elements that extend to permissionless blockchains. If the split persists, EU banks will be less competitive than peers in the U.S. and the U.K. across custody, tokenized liabilities, and stablecoin settlements. This reshapes project roadmaps where banks build bank-issued stablecoin products, tokenized deposits, and on-chain settlement infrastructure, because jurisdictional choice will begin to determine the capital cost of the service and product availability for clients. Thedéen says:

"Going further than that at this point in time is difficult, because I'm the chair and there are so many different views in this committee."

Conclusion

The Basel Committee's return to reassessing the 1,250% risk weight opens a window for more nuanced calibration across classes of crypto exposures, especially for regulated stablecoins. If the committee differentiates risk and adjusts the capital load, banks will gain room to develop custody and on-chain products while maintaining regulatory discipline. If the gap between the EU regime and the Anglo-Saxon jurisdictions remains, global banks will face divergent competitive conditions and will move the development of tokenized services into more favorable legal environments. Stay tuned for the latest updates and opportunities in the new economy, crypto industry, and blockchain developments.