World Federation of Exchanges urges the Basel Committee to revise bank cryptoasset prudential standards to reflect technology neutrality

The World Federation of Exchanges (WFE) published its position on the Basel Committee on Banking Supervision’s targeted, expedited review of the prudential standard for banks’ cryptoasset exposures, arguing that the current framework risks constraining the growth of tokenisation in regulated markets. It calls for the standard to better reflect the principles of technology neutrality and “same risk, same regulation”, including avoiding less favourable treatment for tokenised versions of traditional assets. The WFE recommends that assets with the same functional risk profile be treated consistently regardless of whether they are paper-based, electronic or tokenised, and notes that the current standard can disadvantage tokenised assets, including where they exist on a public blockchain. It also asks the Committee to revisit and clarify its definition of cryptoassets, ideally in coordination with the International Organization of Securities Commissions and the Financial Stability Board, and proposes shifting from a public-versus-private blockchain distinction to a more risk-oriented assessment of measurable factors such as governance, validator concentration, operational resilience and settlement finality. In addition, the WFE seeks clearer treatment of custody, warning that uncertainty over whether custody-only activities attract capital requirements could deter banks from offering custody services. The WFE invited further discussions with the Basel Committee and its members.