Basel Capital Rules Eased to Boost Bank Liquidity and Crypto Trading

US banking regulators are under pressure from Wall Street's biggest trade groups to ease Basel capital rules, which have significant implications for the crypto industry. The letter, sent on June 17, calls for further relaxation of the market risk components of the Basel framework.

The proposed changes would reduce aggregate capital requirements for large banks by approximately 4.8% to 5%, freeing up billions of dollars for lending, dividends, and share buybacks. However, trade bodies estimate that the rules as currently drafted could increase capital requirements for trading activities by between 30% and 89%.

The Treasury market is a particular point of anxiety, with less liquidity affecting not just banks but also mortgages, corporate borrowing, and other areas of finance.