#BaselCommittee
2 articles tagged #BaselCommittee — curated RWA tokenization coverage.
Why Tokenized Finance is Stalling Despite Regulatory Progress
A report by Hashed Open Research and SCBX reveals that tokenized finance in Southeast Asia is stalling despite significant regulatory and infrastructure progress. While on-chain transaction volume in the Asia-Pacific region surged 68% to $2.36 trillion, institutional adoption remains constrained by unfavorable business models. Banks currently face limited revenue potential from tokenized assets, which often cannibalize existing fee-based services. A critical barrier is the Basel Committee's 1,250% capital charge on certain tokenized assets, which makes holding them prohibitively expensive for financial institutions. Countries like Singapore, Thailand, and Malaysia are actively pursuing local-currency stablecoins and tokenized deposits, yet smaller regional banks lack the capacity to absorb these high capital costs. Meanwhile, the Philippines is exploring stablecoins to optimize $35 billion in annual remittances, and Malaysia’s Khazanah Nasional is developing tokenized sukuk. The report concludes that the future of regional tokenization depends on shifting the economic incentive equation rather than further regulatory reform. Until banks identify profitable use cases that outweigh current capital requirements, growth will likely remain steady but slow.
UBS demos permissionless blockchain compliance at infrastructure level
UBS and blockchain firm Nethermind have successfully completed two proofs of concept on the Ethereum Sepolia test network to integrate compliance controls directly into the block production pipeline. This architectural shift moves beyond traditional smart contract-based allow lists, which currently serve as the primary method for institutional compliance on permissionless chains. The initiative addresses critical regulatory concerns regarding governance, Maximal Extractable Value (MEV), and counterparty anonymity that prevent banks from fully adopting public blockchains. By embedding compliance at the infrastructure level, the project aims to satisfy the Basel Committee on Banking Supervision, which currently imposes punitive capital requirements on tokenized securities held on permissionless networks. This development is significant because it seeks to align public blockchain operations with stringent banking regulations, potentially unlocking institutional participation. The work builds upon a previous whitepaper collaboration between Nethermind and Deutsche Bank, highlighting a coordinated industry effort to solve systemic infrastructure risks. Successfully bridging this gap could fundamentally alter how financial institutions interact with decentralized networks for asset tokenization.