CET1 Ratio: What It Means for Banks and Crypto Investors
When you hear CET1 ratio, Common Equity Tier 1 ratio, a key measure of a bank’s financial strength based on its highest-quality capital. Also known as Core Capital Ratio, it’s the number regulators use to decide if a bank can survive a financial shock. It’s not just for bankers—it’s a silent force behind every crypto exchange that holds user funds, every stablecoin issuer, and every platform that connects traditional finance to blockchain.
The CET1 ratio is built on Basel III, a global framework for bank capital requirements designed after the 2008 financial crisis. It forces banks to hold enough real cash and retained earnings—no fancy derivatives, no loans with shaky backing—to cover losses. The minimum? Usually 4.5%, but top banks like JPMorgan or HSBC often hold over 12%. Why? Because regulators don’t trust guesswork. If a bank’s CET1 drops too low, it can’t lend, can’t expand, and might be forced to raise money fast—or shut down.
This matters to crypto because bank regulations, rules that control how financial institutions operate, especially around capital, liquidity, and customer protection. are now shaping crypto. Japan’s FSA demands exchanges keep 95% of funds in cold wallets—not because they’re paranoid, but because they treat crypto like securities under the same rules as banks. The Philippines SEC blacklisted 15 exchanges not for being shady, but for lacking the capital buffers that CET1 measures. Even stablecoins like USDZ, which claim to be backed by private loans, need banking partners—and those banks won’t touch them unless their CET1 is rock solid.
You won’t find CET1 on your Binance dashboard, but it’s the reason Binance can offer fiat on-ramps. It’s why Nash can give you a debit card linked to crypto. And it’s why platforms like Bitroom or Dexfin vanish overnight—they never had the capital to meet even the bare minimum. If you’re holding crypto on an exchange, you’re trusting its ability to stay solvent. The CET1 ratio is the closest thing to a financial health check for that trust.
What’s coming next? More countries will treat crypto firms like banks. More stablecoins will need banking licenses. And more airdrops will fail because their issuers never understood that real finance doesn’t run on hype—it runs on capital. Below, you’ll find posts that break down how these rules play out in Japan, the Philippines, and beyond. No theory. No fluff. Just how regulation is changing crypto, one capital ratio at a time.
