Regulatory Roundup #9

Summary

Basel blinking on its “brutal” crypto capital rules sets the tone this week, with US pushback and UK reticence forcing a rethink of SCO60 just as Trump lines up a friendlier cast at the CFTC and FDIC, and the OCC blesses banks holding small working balances of native tokens to pay gas. In the UK, the Bank of England loosens its proposed backing model for sterling systemic stablecoins by letting more reserves sit in gilts, while Ireland fires a warning shot with a sizeable AML fine for Coinbase Europe.

🔦 Spotlight

US revolt and UK feet dragging pushes Basel to rethink “brutal” crypto capital rules for banks

The Basel Committee has quietly done something it almost never does: admit that one of its shiny new global standards may need going back to the workshop.

Under the current cryptoasset chapter of the Basel framework (SCO60), most unbacked crypto and many permissionless-chain assets, including a large chunk of stablecoins, sit in a “Group 2” bucket with a 1,250% risk weight and tight caps on exposures. In practice, that makes it uneconomic for banks to hold these assets on balance sheet at any scale.

The US Federal Reserve and the Bank of England have now refused to swallow those rules whole. Both authorities have pushed back on the idea that every permissionless asset should be treated as if it were a meme coin with a gambling problem, especially where you are talking about regulated stablecoins or tokenized Treasuries. The chair of the Basel Committee, Erik Thedéen, has conceded that the standard needs a rethink in light of stablecoin growth and the policy shift in Washington and London.

This is not happening in a vacuum. A coalition of big trade associations, led by the GFMA and friends, has spent months arguing that the crypto standard is “excessively conservative and overly punitive”. Their modeling says the 1,250% risk weight and related limits make it uneconomic for banks to touch many cryptoassets at all, even when those assets are tokenized versions of very boring things like government bonds. The same group is explicitly asking Basel to pause and recalibrate SCO60 before full implementation in 2026.

On the US side, Fed Governor Michelle Bowman has been laying the intellectual groundwork. As the Fed’s vice chair for supervision, she has called repeatedly for a “level playing field” in digital assets, warned against an “overly cautious mindset” that drives activity into the shadows, and backed moves to strip out woolly “reputational risk” as a reason to shut banks out of crypto. When your top bank supervisor is basically saying “let banks do crypto properly or watch non-banks eat their lunch”, Basel’s older, more defensive standard starts to look dated.

The EU, for its part, has already hardwired parts of SCO60 into its rulebook but deliberately left out some of the harshest bits, particularly around the most extreme treatment of permissionless stablecoins. That leaves Brussels in an awkward position: ahead of the curve on codifying the standard, but potentially stuck with a more conservative approach if Basel now softens under US and UK pressure.

SCO long, farewell

If Basel genuinely softens SCO60 for higher quality stablecoins and tokenized securities, it opens the door for global banks to put more of this activity on balance sheet without setting fire to their capital ratios. This is not about forcing Bitcoin into every treasury portfolio. It is about letting banks underwrite, hold and intermediate tokenized versions of things they already understand, in size, which is where you start to see real improvements in liquidity, credit intermediation and institutional access.

The trade bodies lobbying Basel have been pretty blunt about the alternative: keep the ultra-punitive capital treatment and you simply entrench a “shadow crypto system” in non-banks and offshore venues. A more risk sensitive standard could pull at least some of that flow back into prudentially regulated institutions, where supervisors actually have line of sight, without pretending that volatility or operational risk have somehow vanished.

The real wedge issue here is stablecoins. The fight is not really about whether banks should warehouse speculative spot positions in dog-themed tokens. It is about whether well-regulated, fiat-backed stablecoins and tokenized cash products should really sit in the same capital bucket as the wilder end of the market. As frameworks for stablecoins and tokenization mature in key jurisdictions, Basel will find it harder to maintain the fiction that all tokens are created equal. If the US and UK now drag the standard toward something more nuanced, while the EU has already hard-coded an earlier, stricter version, we are likely to see a fresh round of fragmentation and capital arbitrage opportunities across regimes. Which, in global banking, is almost a feature, not a bug.

🌎 Global Developments

🇺🇸 United States

Trump lines up a pro-crypto duo at CFTC and FDIC

President Trump is trying to lock in a friendlier crypto posture across both the trading and banking rails by installing Michael Selig at the CFTC and Travis Hill at the FDIC.

On the markets side, Selig is heading for a confirmation hearing at the Senate Agriculture Committee, with crypto market structure, the CLARITY Act and even election markets expected to feature. If confirmed, he would take over the agency just as Congress is close to handing it a much bigger role in spot crypto oversight.

On the banking side, Travis Hill has already been running the FDIC on an acting basis and now faces the Senate Banking Committee as Trump’s nominee to chair the agency permanently. Hill has used his acting tenure to pivot away from the Biden-era skepticism on bank–crypto relationships, pushing back on “reputational risk” as a back-door veto on crypto clients and talking up the need for clearer, more predictable rules so banks can engage with digital assets inside the prudential perimeter. His nomination has broadly been welcomed by the banking industry, which sees him as pragmatic on capital, mergers and innovation.

Taken together, the Selig and Hill picks sketch a coherent Trump-era settlement: CFTC as the primary cop for trading and derivatives, FDIC as a willing partner in getting insured banks comfortable with custody, payments and tokenization. If both are confirmed, the main constraint for US crypto businesses will be how quickly they can adapt to a more “onshore, in-bank” model, rather than whether the regulators want them there at all.

SEC drops standalone crypto focus from its 2026 exam priorities

In a neat bit of regulatory mood music, the SEC’s Division of Examinations has released its 2026 priorities list without a separate crypto heading. After two cycles where “crypto assets” were singled out, the new agenda talks instead about fiduciary duties, conduct standards, custody and customer data protection, and treats digital assets as just one part of those broader themes.

The SEC insists this does not mean crypto is off the radar, only that examiners are moving away from product-of-the-month lists and back toward risk buckets. In practice, that should feel different on the ground: fewer “because crypto” sweeps, more questions about how a firm runs conflicts, safeguarding and disclosures across all asset classes. For crypto-native firms that spent the last few years feeling like pinned butterflies, this is a modest but very real vibe shift.

OCC says banks can hold crypto on balance sheet to pay network gas fees

To round out the “let banks do crypto like grown-ups” theme, the Office of the Comptroller of the Currency has confirmed that national banks can hold cryptoassets as principal on balance sheet for the specific purpose of paying blockchain network fees.

In Interpretive Letter 1186, the OCC says banks may pay network fees (gas) on blockchain networks to facilitate otherwise permissible activities, and may hold the amount of crypto they “anticipate a reasonably foreseeable need” for those fees. The same letter confirms that banks can also hold crypto as principal where it is necessary to test crypto-related platforms they are developing or buying.

The guidance sounds narrow, but it is an important psychological shift. For years, the message from US bank regulators was essentially “we do not like you touching native tokens at all”. Now the OCC is explicitly recognizing that if banks are going to provide custody, payments or stablecoin services under laws like the GENIUS Act, they are going to need small working balances of the relevant assets to pay gas. Treating those balances as ordinary operational lubricant, rather than radioactive waste, removes one more friction point for national banks that want to move real activity on-chain.

🇪🇺 European Union

🇮🇪 Ireland: Central Bank lands first big crypto AML fine on Coinbase Europe

The Central Bank of Ireland has taken its first major enforcement action against a crypto firm, fining Coinbase Europe Limited €21.46 million for anti-money laundering and counter-terrorist financing failures in its transaction monitoring. The sanction, announced on 6 November 2025, relates to breaches of Ireland’s Criminal Justice (Money Laundering and Terrorist Financing) Act between April 2021 and March 2025. 

At the heart of the case were faults in Coinbase Europe’s automated monitoring system. Those configuration issues meant that over 30 million transactions, worth more than €176 billion and representing roughly 31% of all activity in the period, were not properly monitored over 12 months. It then took the firm almost three years to clear the backlog. When it finally did, Coinbase filed 2,708 late suspicious transaction reports, covering suspected money laundering, fraud and scams, drug trafficking, cyber-attacks and even child sexual exploitation. 

Coinbase admitted the breaches, accepted a reprimand and agreed to the €30.66 million penalty proposed by the Central Bank, which was reduced to €21.46 million under Ireland’s settlement discount scheme and is now subject to High Court confirmation. The Central Bank has been explicit that this is meant as a signal case for the sector: CASPs are expected to operate industrial-strength monitoring from day one, and multi-year “we are fixing the system” timelines will not fly. 

🇪🇺 MiCA Authorizations Update (per ESMA CASP Register)

New MiCA-route authorizations and registrations since 29 October 2025:

• 🇮🇪 Push / Aave Push (Ireland) – authorized 12 November 2025
• 🇸🇮 Orcabay (Slovenia) – authorized 10 November 2025
• 🇩🇪 Huddlestock GmbH (Germany) – authorized 6 November 2025
• 🇸🇮 Incrementum (Slovenia) – authorized 6 November 2025
• 🇩🇪 Volksbank Raiffeisenbank Bayern Mitte eG (Germany) – authorized 5 November 2025
• 🇳🇱 Coinmerce B.V. (Netherlands) – authorized 5 November 2025
• 🇪🇸 Bit2Me (Spain) – authorized 31 October 2025
• 🇦🇹 AMINA EU (Austria) – authorized 29 October 2025
• 🇳🇱 ZeroHash Europe (Netherlands) – authorized 29 October 2025

🇬🇧 United Kingdom

BoE softens backing rules for sterling stablecoins (a bit), but caps and caution stay

The Bank of England has finally put proper flesh on the bones of its regime for sterling-denominated systemic stablecoins, publishing a consultation paper that will underpin how “payment” stablecoins sit alongside cash and bank deposits in the UK. The regime will apply to stablecoins that HM Treasury designates as systemic, with joint oversight by the BoE and FCA under the FSMA 2023 digital settlement asset framework.  

The headline change versus the 2023 discussion paper is on reserves. Back then, the Bank floated a very stark model: systemic stablecoins would be backed 100% by unremunerated deposits at the Bank of England.  

The new consultation softens this quite a bit. Issuers would now be allowed to hold up to 60% of backing assets in short-term sterling UK government debt, with the remaining at least 40% kept as non-interest-bearing deposits at the BoE. For firms migrating from the FCA regime there is an even looser temporary phase in which up to 95% of backing can be gilts while they transition.  

That shift is the good news: it gives systemic issuers a viable revenue model on most of the reserve stack, rather than forcing them to live entirely off fees while parking everything in a zero-yield BoE account. At the same time, the 40% central bank deposit floor is meant to preserve “singleness” and convertibility of the stablecoin into public money, and to give the Bank a big, ready-to-use buffer if redemptions spike. The consultation also confirms that commercial bank deposits are out as backing assets for systemic coins, and that coin holders will not earn interest, keeping these instruments firmly in the “money” bucket rather than turning them into tokenized MMFs.  

Elsewhere the paper hardens rather than softens. The Bank is pressing ahead with temporary holding caps of £20,000 per individual and £10 million per business, to limit deposit flight from banks into stablecoins while the regime beds in, and is explicit that these will only be lifted once it is comfortable that they pose no systemic threat. It is also consulting on providing liquidity support to systemic issuers in stress, and on a bespoke resolution framework so that payments keep running if an issuer fails.  

TL;DR: the UK is open to systemic stablecoins in the core payments mix and is willing to move off the most extreme version of “all reserves at the central bank”, but it is not trying to win the beauty contest with the US GENIUS regime. Sterling payment coins get a sustainable reserve model and a clear prudential home; in return, they accept tight caps, no bank-deposit backing, and a lot of Bank of England supervision.

🇯🇵 Japan

Japan lines up 20% flat tax and “financial product” status for crypto

Japan’s Financial Services Agency is preparing a pretty sweeping crypto reboot. According to reporting, the FSA plans to treat cryptoassets as “financial products” under the Financial Instruments and Exchange Act, rather than the current awkward bucket of “miscellaneous income”.  

On the regulatory side, the move would pull around 105 tokens listed on Japanese exchanges, including Bitcoin and Ether, into a proper securities-style framework. Exchanges would have to publish detailed disclosures on each asset, covering the underlying technology, volatility profile and whether there is an identifiable issuer. As mentioned in Issue #7, those tokens would also be brought within insider trading rules for the first time, so trading on non-public information such as upcoming listings or delistings becomes explicitly off limits.  

On tax, the FSA wants to swap today’s progressive rates of up to 55 percent on crypto income for a separate 20 percent flat rate that matches listed equities. That would apply to gains on the same 105 “approved” cryptocurrencies and would put crypto in a much friendlier place for both high earning retail investors and domestic institutions, with industry groups also pushing for loss carry forwards under the new regime. The package is expected to be taken to the 2026 ordinary session of the Diet, alongside related changes that could allow banks and insurers to sell crypto to clients via their securities subsidiaries and potentially hold certain assets on the balance sheet.  

If it lands broadly as sketched, Japan ends up with something quite rare: a major market where crypto is taxed like stocks, governed under the same financial product law, and sold by the same broker dealer and banking groups, with proper disclosure and insider trading rules. In other words, less “weird Web3 corner”, more “just another volatile thing on your securities statement”.

🔎 Things to Watch

• 🏛️ US Senate progress/bickering on market structure regulation
• 🇬🇧 Imminent final Statutory Instrument for the UK crypto regime, and commencement date
• 🇪🇺 The next set of MiCA grandfathering periods are set to expire at the end of 2025. Relevant EU member states include Austria, Germany, Greece, Ireland, Lithuania, Slovakia, Spain. Of the EEA states, Norway and Liechtenstein are in the same boat.

Coming into view:

• OECD Crypto-Asset Reporting Framework (CARF) implementation timeline across EU and G20 nations ahead of 2026 start.
• Further FCA consultations and indicative start date for the UK crypto regime.

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