The UK regulatory crackdown! Banks' crypto operations face a '1250% risk weight' nuclear strike, shattering traditional institutions' entry dreams?
1. Regulatory Nuclear Bomb: Basel rules make banks 'dance with shackles'.
The UK Treasury released a draft regulation on crypto assets on April 29, directly applying the Basel Committee's crypto asset capital standards effective January 2025, imposing 'the strictest shackles in history' on traditional financial institutions:
Risk Weight Grading Massacre:
1st Group (Compliant Stablecoins, Tokenized Traditional Assets): Normal risk weight.
2nd Group (Mainstream Coins like BTC/ETH): 1250% risk weight (i.e., for every $1 of BTC held, $12.5 of capital must be reserved).
Deadly Red Line: If a bank's crypto exposure exceeds tier 1 capital by 1%, the excess will be calculated at 1250%; if it exceeds 2%, then the entire position is subject to this standard.
Algorithmic Stablecoins Sentenced to Death: Clearly excluded from the 1st group, holding them triggers capital penalties for banks.
Data Evidence: According to calculations by the Basel Committee, a 1250% risk weight will cause banks' crypto business ROE (Return on Equity) to plummet to 0.8%, far below the 12% of traditional lending business.
2. Market Impact: Liquidity Black Hole and Institutional Withdrawal Wave.
Bank Selling Pressure: Lloyds Bank has announced it will liquidate all 2nd group assets by the end of June, and HSBC has suspended crypto custody services.
Lending Market Frozen: Banks require an additional 300% collateral for crypto loans, leading to a 47% drop in funding rates for protocols like Compound.
Regulatory Arbitrage Opportunities:
Offshore Channels Rise: UK banks turn to collaborate with licensed institutions in Dubai's ADGM, indirectly holding crypto assets through SPV structures.
DeFi Staking Suffers: FCA plans to regulate staking services, requiring custodians to disclose income sources.
3. Ultimate Deduction: Stifling Innovation or Risk Clearance?
1. Pessimistic Scenario (60% probability)
Trigger Point: After the FCA feedback deadline on July 31, regulations will be implemented, and banks will accelerate their exit.
Target Level: The liquidity premium of BTC disappears, with a short-term drop to the psychological barrier of $100,000.
Core Reason: The 1250% risk weight effectively prohibits bank participation, cutting off the main channel for fiat currency deposits.
2. Optimistic Reversal (40% probability)
Black Swan: If the UK Reform Party comes to power, it promises to overturn Basel rules and establish a central bank Bitcoin reserve.
Key Defense Line: The institutional cost line of 104,500 has not been broken, and BlackRock ETF continues to see net inflows.
4. Survival Strategy: Compliance breakout roadmap.
Risk-averse Reallocation: Sell off high-correlated compliant stablecoins (such as USDC) and switch to decentralized stablecoin DAI.
Regulatory Arbitrage: Apply for exemptions through the FCA's 'sandbox' (three institutions have been approved to test low-weight models).
On-chain Migration: Use compliant custodians like Coinbase Institutional to avoid bank channel restrictions.
$BTC
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