Basel III Reclassification Could Enable Banks to Hold XRP

The Basel Committee on Banking Supervision may soon reclassify XRP from a high-risk asset to a Tier-1 digital asset, potentially allowing banks to hold XRP directly on their balance sheets. This change could happen as early as Q2 2026, according to recent discussions.

The Decision/Ruling Details

The proposed reclassification would move XRP from the Type 2 crypto exposure category, which requires a 1,250% risk weight, to a lower-risk category. This adjustment would significantly reduce the capital banks need to hold against XRP, from $12.50 for every $1 of XRP to a much lower ratio. The reclassification aims to reflect the improved regulatory clarity around cryptocurrencies. Ripple Labs and other XRP-related entities would be directly affected by this change, as it could lead to increased institutional adoption.

Market/Industry Implications

This potential reclassification could open new opportunities for banks to custody, deploy, and settle using XRP without excessive capital requirements. Analysts estimate that this could increase XRP's liquidity by up to 30% within the first year of implementation. The move would align XRP's treatment with that of tokenized traditional assets and stablecoins, which are currently classified as Tier-1. Industry expert Stern Drew commented on social media platform X that this change could mark an inflection point for XRP's institutional acceptance.

What Comes Next

The Basel Committee is expected to finalize its decision by March 2026, with implementation potentially starting in Q2 2026. Market participants should watch for further regulatory developments and the final classification details. Additionally, banks may begin preparing their systems to handle XRP as a Tier-1 asset, which could lead to increased integration into banking services.

XRP Price could see increased stability and demand if banks start holding the cryptocurrency directly. For more on regulatory changes in the crypto space, visit Governance News.