The Basel Committee’s SCO60 standard set a single global capital treatment for banks’ crypto exposures from January 1, 2026 — but with the United States rejecting it outright, the United Kingdom stepping back, and the European Union transposing it through its Capital Requirements Regulation, banks now face three divergent regimes for the same asset. The Committee has since reopened the rules, leaving the world’s most consequential crypto prudential standard unsettled in the year it was meant to bind.
Few crypto rules matter more to institutional adoption than how much capital a bank must hold against a digital-asset exposure, and SCO60 answered that with a punitive number: a 1,250% risk weight for the riskiest crypto, effectively one dollar of capital for every dollar of exposure. The standard took effect on January 1, 2026 after a one-year delay, yet by then the consensus behind it had fractured. This analysis compares how the EU, UK and US are treating the same framework, the enforcement backdrop that shaped it, and what the Basel Committee’s mid-2026 review could change.
Key Facts:
• SCO60, the Basel cryptoasset prudential standard, took effect January 1, 2026, delayed one year from 2025 — Bank for International Settlements
• Group 2 cryptoassets carry a 1,250% risk weight, broadly equivalent to full capital backing — BIS SCO60
• Group 2 exposures must generally stay below 1% of Tier 1 capital and cannot exceed 2%; a breach triggers harsher Group 2b treatment — BIS SCO60
• A coalition of industry bodies including ISDA, GFMA and the Bank Policy Institute wrote to the Committee in August 2025 calling for recalibration — ISDA
• Six US senators led by Cynthia Lummis and Bill Hagerty wrote to the Federal Reserve, OCC and FDIC on June 6, 2026 calling the 1,250% weight a de facto ban — press reports
• The Basel Committee agreed to an expedited review in November 2025 and reported progress in February 2026 — BIS
Methodology and sources
This analysis draws on primary and Tier 1 sources: the Basel Committee’s SCO60 chapter of the consolidated framework, the European Banking Authority’s draft regulatory technical standards on crypto-asset exposures under Article 501d of the Capital Requirements Regulation (CRR3), statements by the Basel Committee Chair reported by the Financial Times, and industry submissions from ISDA and the Global Financial Markets Association. The jurisdictional scope is the European Union, the United Kingdom and the United States, with the global Basel baseline as the reference point. The time window runs from the standard’s January 1, 2026 effective date through the Committee’s February 2026 review update. Interpretations of national transposition remain provisional where rules are still in consultation.
What the Basel standard actually requires
What is the Basel 1,250% rule? SCO60 sorts cryptoassets into four buckets. Group 1a covers tokenised traditional assets, Group 1b covers stablecoins that pass a redemption and reserve test, and both broadly inherit the capital treatment of their underlying assets. Group 2 captures everything that fails those conditions — including unbacked cryptoassets such as Bitcoin — and splits into Group 2a, where limited hedging is recognised, and Group 2b, where it is not. Group 2 exposures attract a 1,250% risk weight, which under an 8% minimum capital ratio forces a bank to hold roughly one dollar of capital for every dollar of exposure. On top of that, a bank’s total Group 2 holdings must generally remain under 1% of Tier 1 capital and must never exceed 2%; breaching the cap pushes the entire excess into the harshest 2b treatment. The design is deliberately conservative, built to keep crypto risk at the periphery of the regulated banking system.
Why the US rejected it
The United States has declined to implement SCO60 as written. The Trump Administration has characterised the fixed 1,250% risk weight as “anti-innovation” and “anti-competitive,” and is promoting a domestically tailored, risk-based approach that links prudential requirements to measurable market behaviour rather than a prescriptive threshold. The political pressure is bipartisan in form if not in substance: on June 6, 2026, six Republican senators led by Cynthia Lummis and Bill Hagerty wrote to the Federal Reserve, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC), arguing that the weight functions as a de facto ban on US bank crypto exposure. Federal Reserve Vice Chair for Supervision Michelle Bowman has signalled that the Fed will propose its own capital changes, with a 90-day comment period to follow.
“Basel rules currently label Bitcoin as a toxic asset.”
— Conner Brown, Managing Director, Bitcoin Policy Institute (Cryptopolitan, 2026)
How the EU and UK diverge
The European Union is the standard’s most faithful adopter. It is transposing the Basel treatment through the Capital Requirements Regulation, with the European Banking Authority publishing draft regulatory technical standards under Article 501d in August 2025 to operationalise the capital charges and the transitional regime. The result is that EU banks face the full SCO60 architecture, including the 1,250% weight and the Group 2 cap, with national competent authorities supervising compliance.
The United Kingdom has taken a more cautious path. The Prudential Regulation Authority (PRA), part of the Bank of England, has held back from implementing the original framework on the January 2026 timeline, aligning instead with the Basel Committee’s own decision to reopen the rules. That leaves a widening gap: an EU bank and a UK bank can hold the same Bitcoin exposure and face materially different capital outcomes, and both differ from a US bank operating under a framework still being written. For cross-border groups, the divergence is not academic — it determines where crypto activity is cheapest to house.
| Jurisdiction / Regulator | Status (2026) | Scope | Key requirement | Treatment / consequence |
|---|---|---|---|---|
| Global (Basel Committee) | Effective Jan 1, 2026; under review | Internationally active banks | SCO60: Group 2 at 1,250% risk weight | ~$1 capital per $1 exposure; 1%–2% Tier 1 cap |
| EU (EBA / national CAs, CRR3) | Transposing | EU credit institutions | Article 501d RTS implements Basel charges | Full SCO60 weights plus transitional regime |
| UK (PRA / Bank of England) | Held back, awaiting review | PRA-authorised firms | No implementation on original timeline | Aligned to Basel reopening; rules pending |
| US (Fed / OCC / FDIC) | Rejected as written | US banking organisations | Domestic risk-based approach proposed | 1,250% weight not adopted; rule in consultation |
Sources: BIS SCO60; EBA draft RTS under CRR3 Article 501d (August 2025); press reporting on US and UK positions. Last updated: June 17, 2026.
The enforcement backdrop that shaped the rule
The conservatism of SCO60 did not emerge in a vacuum. It was drafted in the shadow of the largest crypto enforcement actions on record. In November 2023, Binance agreed to a settlement of more than $4.3 billion with the US Department of Justice, the Commodity Futures Trading Commission (CFTC), the Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC) over anti-money-laundering and sanctions failures — a case that crystallised regulators’ concerns about the operational and financial-crime risks of crypto intermediaries. For prudential supervisors, episodes like that one justified treating unbacked crypto as a near-worthless asset for capital purposes. Critics counter that conflating the financial-crime record of an exchange with the market risk of a spot Bitcoin holding produces a charge unmoored from the asset’s actual volatility.
Why the Committee reopened its own rule
Why did the Basel Committee revisit a standard it had only just brought into force? The answer is that the market moved underneath it. The rules were drafted years ago around unbacked cryptoassets, but the explosive growth of stablecoins — now a multi-hundred-billion-dollar system embedded in payments — changed the risk picture the Committee was trying to capture. A coalition of industry bodies called for recalibration in August 2025, arguing the charges made bank participation uneconomical. After the US and UK declined to implement the framework, the Committee agreed in November 2025 to expedite a targeted review, and reported in February 2026 that the work was progressing, with an update expected later in the year.
“The focus back then was very much on the bitcoins of this world. Now of course everyone is talking about stablecoins.”
— Erik Thedéen, Chair, Basel Committee on Banking Supervision, and Governor of Sweden’s Riksbank (Financial Times via CoinDesk, November 19, 2025)
Thedéen has been candid that consensus will be hard to rebuild. “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,” he said. That admission matters: the Basel framework works only if its members implement it in concert, and the US and UK opt-outs have already broken the uniformity the standard depends on.
What this means for banks, exchanges and compliance teams
For banks, the divergence creates a capital-arbitrage map. A trading desk or custody business that is uneconomic to run inside an EU entity under the full 1,250% weight may be viable in a US or UK subsidiary operating under a lighter or still-undefined regime. Group treasury and capital-planning teams will need to model crypto exposures separately by jurisdiction, and to assume the rules will move again before they settle.
For exchanges and crypto-asset service providers seeking banking partners, the practical effect is that EU banks remain the most constrained counterparties for Group 2 assets, while US institutions may gain room to expand custody and trading services if the Fed’s proposal lands lighter than Basel. For legal and compliance functions, the priority is monitoring three moving consultations at once — the Basel review, the EU’s CRR3 technical standards, and the US capital proposal — and avoiding the assumption that any one of them is final. The 1% Tier 1 trigger is the operational line to watch: a bank can drift toward it through ordinary balance-sheet growth and find its entire Group 2 book reclassified.
The forward view
Three threads will determine where this lands. First, the Basel Committee’s review, expected to report later in 2026, will show whether the global baseline is softened — particularly for tokenised assets and stablecoins, which Thedéen has flagged as the unfinished business of the original text. Second, the US rule: the Fed’s proposed capital changes and their 90-day comment period will define the lightest of the three regimes and set the benchmark that industry will lobby the EU and UK to match. Third, the EU’s posture: whether Brussels holds to the full Basel treatment or grants further transitional relief as its banks argue they are being disadvantaged. The contested core is unchanged — whether spot crypto deserves a near-maximal capital charge, or a calibrated one tied to measurable risk. Until the Committee answers that, the same Bitcoin will cost a bank a very different amount of capital depending on where it is booked.
TL;DR
The Basel Committee’s SCO60 standard took effect on January 1, 2026, imposing a 1,250% risk weight — roughly full capital backing — on Group 2 cryptoassets such as Bitcoin, with total Group 2 holdings capped at 2% of Tier 1 capital. But the United States has rejected the framework as “anti-innovation,” the United Kingdom has held back, and only the European Union is transposing it in full through CRR3. After the US and UK opted out, the Committee reopened the rules in November 2025, with a review due later in 2026. The upshot: banks face three different capital regimes for the same crypto exposure, and the global standard is unsettled in the year it was meant to bind.
FAQ
When did the Basel crypto capital standard take effect?
SCO60 took effect on January 1, 2026, one year later than originally planned. The Basel Committee agreed to an expedited review of the standard in November 2025 and reported progress in February 2026.
What is the 1,250% risk weight?
It is the capital charge applied to Group 2 cryptoassets, including unbacked tokens such as Bitcoin. At an 8% minimum capital ratio it requires roughly one dollar of capital for every dollar of exposure, making such holdings expensive for banks.
Why did the US and UK decline to implement it?
The US views the fixed 1,250% weight as “anti-innovation” and a de facto ban on bank crypto activity, and is drafting its own risk-based rule. The UK’s Prudential Regulation Authority held back on the original timeline, aligning with the Basel Committee’s decision to reopen the framework.
Is the European Union implementing the rule?
Yes. The EU is transposing SCO60 through the Capital Requirements Regulation, with the European Banking Authority publishing draft technical standards under Article 501d in August 2025. EU banks face the full Basel treatment plus a transitional regime.
What is the Group 2 exposure cap?
A bank’s total Group 2 cryptoasset exposures must generally stay below 1% of Tier 1 capital and must not exceed 2%. Breaching the cap pushes the excess into the harsher Group 2b treatment.
What happens next?
The Basel Committee’s review is expected to report later in 2026, the US Federal Reserve will consult on its own capital approach, and the EU will decide whether to hold the full treatment or grant further relief.
For related analysis, see our coverage of the MiCA and GENIUS Act stablecoin deadlines, Hong Kong’s stablecoin licensing split, the CLARITY Act’s SEC-CFTC jurisdiction divide, and how DORA’s cloud oversight splits the EU, UK and US.
This article is informational analysis only and does not constitute legal, regulatory, tax, or investment advice. Regulatory frameworks change frequently and interpretation depends on facts and circumstances; primary documents and official regulator guidance always supersede summaries. Firms should consult qualified legal counsel and their relevant supervisory authority before taking any action based on the analysis above.
Rick Steves
Rick Steves has seen business and economics through many lenses. He joined the financial services industry in 2009, and has been a financial journalist since 2011. He holds a degree in Business Administration and has experience producing real-time news, from both buy-side and sell-side, as well as for retail traders, brokers and service providers. Steves' work has appeared in a variety of online publications including FX Street, NewsBTC, FinanceFeeds, and The Industry Spread. Rick has great interest in the dynamics of the trading industry. The never-ending clash between technology, economics, regulation, and more importantly, the people.
