The European Union has finalized its Basel III banking package, with the rules officially taking effect on July 9, 2024, and most substantive regulations applying from January 1, 2025.
The regulatory framework, in development since the 2008 financial crisis, required significant adjustments based on European Banking Authority impact assessments, which estimated capital increases of 18-24%.
These adjustments reflect Europe's heavy reliance on bank lending to small and medium-sized enterprises.
The Fundamental Review of the Trading Book (FRTB) was initially scheduled for 2026 but has faced multiple postponements. The UK's Prudential Regulation Authority has delayed its own Basel 3.1 implementation to January 1, 2027, explicitly to align with EU timelines.
Under the Basel framework, certain crypto asset holdings could face risk weights of up to 1,250%, meaning banks must hold capital equal to the full value of their crypto position.