Here’s the scoop:
Citigroup UK CEO Tiina Lee (Citi UK head) is urging regulators to revisit the very stringent capital rules being proposed for crypto holdings by banks . These global Basel Committee standards would require banks to hold 1250 percent risk-weighted capital for any crypto assets—meaning a £125 capital buffer for every £100 in crypto exposure—a measure she describes as “prohibitive” .
Lee voiced her concerns at TheCityUK’s annual conference in London on June 26, 2025, warning that such harsh rules could push crypto activity into shadow banking, rather than under the oversight of regulated institutions . She argued the alternative—to force crypto into unregulated corners—could actually be worse than integrating digital assets into mainstream banking with appropriate oversight .
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🔍 Why This Matters
Factor Implication
Prohibitive capital charges Discourage banks from offering crypto services, potentially stalling innovation.
Risk of shadow banking Crypto could migrate to unregulated entities, increasing opacity and systemic risk.
Call to reevaluate Lee urges a balanced approach—embedding crypto within regulated frameworks, not sidelining it.
This debate comes amid a wave of crypto-related regulatory actions: the EU is working on stablecoin regulation, while the BIS has cautioned about risks to monetary stability . U.S. regulators too have recently signaled openness to regulated bank involvement in digital assets .
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✅ Key Takeaways
1. 1250% capital rule could hamper banks’ participation in crypto markets.
2. Lee’s stance: revamp regulation to keep crypto within the mainstream, not the unregulated fringes.
3. Wider context: global trend toward stricter crypto rules (e.g., EU, BIS), but also growing institutional (bank and regulatory) engagement.
Let me know if you’d like a deeper dive—perhaps how this might impact UK
banks or global regulatory trends!