The nation’s largest banks are asking an international body of regulators to give them the space to grow their crypto asset exposures, sparking debate over where guardrails should be placed on the emerging asset class.
On Tuesday, an advocacy group representing the eight largest U.S.-based financial institutions wrote to the Bank of International Settlements (BIS) regarding its proposal for a global framework for bank exposure to crypto assets.
“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,” the Financial Services Forum wrote.
The BIS’s Basel Committee, the world’s primary standard setter for bank regulatory rules, published a proposal framework in June that would delineate assets like stablecoins from more speculative assets like bitcoin. The committee, which flagged “financial stability concerns” in the crypto space, proposes different regulatory approaches based on which type of crypto assets a bank has exposure to.
The FSF (which represents Bank of America, BNY Mellon, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, State Street, and Wells Fargo) urged the BIS to lighten the framework’s more stringent approach to riskier crypto assets.
The banks say the BIS should encourage banks to deepen their involvement in the crypto space, since it would bring the emerging asset class into the “clear line-of-sight” of banking regulators.
U.S. bank regulators have largely deferred to the BIS with regard to any approach, but Securities and Exchange Commission