The United States is leading efforts to persuade global banking regulators to reconsider cryptocurrency exposure standards scheduled to take effect in 2026, according to people familiar with the matter. The push comes as the stablecoin sector has grown substantially since the Basel Committee on Banking Supervision established its original framework in 2022, raising questions about whether the rules remain appropriate for the current market environment.
What to Know:
- The Basel Committee's 2022 standards imposed capital requirements that banks interpreted as discouraging crypto holdings, but the industry landscape has shifted dramatically since then
- Major jurisdictions including the United States and United Kingdom have not committed to implementing the rules on schedule, with Singapore delaying its adoption by one year
- The Financial Stability Board and Bank of England are examining potential risks from stablecoins and private finance, though regulators remain divided on timing for any framework revision
Diverging Views on Banking Standards
Bloomberg reported Friday that discussions are underway among global regulators to potentially overhaul rules governing how banks hold cryptocurrency assets. The Basel Committee's 2022 framework covered tokenized traditional assets, stablecoins, and unbacked digital assets. Senior finance executives told the news outlet that banks have largely viewed these standards as imposing heavy capital burdens that effectively signal they should steer clear of crypto holdings.
The regulatory environment has evolved since the committee published its original guidance. The United States has adopted a more receptive stance toward the crypto sector, a shift that has prompted debates within the Basel Committee about whether the rules fit the current landscape.
The committee updated its crypto standards in 2024 but pushed back implementation by one year.
Sources familiar with the discussions said the United States has argued the rules are incompatible with how the industry has developed, particularly regarding stablecoins. Some countries have expressed sympathy with this position and support reviewing the standards before widespread adoption.
The Bank of England said it continues working on implementing its prudential framework for crypto exposures while engaging with other jurisdictions to promote regulatory consistency.
The Monetary Authority of Singapore announced a one-year delay of new crypto prudential standards based on the Basel Committee's measures. The European Central Bank, however, believes the current standards should be implemented first, with any revision considered later.
Stablecoin Oversight Remains Contentious
Stablecoin regulation has encountered obstacles despite growing interest in the sector. The European Central Bank has advocated for banning multi-issuance stablecoins in the European Union and elsewhere, following a recommendation from the European Systemic Risk Board.
The U.S. banking industry has raised concerns about the Guiding and Establishing National Innovation for U.S. Stablecoins Act, citing potential loopholes that could create significant risks for the financial system. The Financial Stability Board, which monitors and advises on the global financial system, recently pledged to address evolving threats from private finance and increasing stablecoin usage.
The Financial Action Task Force said in June that rising stablecoin adoption presents mounting challenges to global financial security, noting that criminal use of these digital assets is becoming more prevalent. Bank of England Governor Andrew Bailey, who chairs the Financial Stability Board, said earlier this month the international watchdog would strengthen its policy response to emerging risks from private finance and stablecoins.
Bailey said the organization would hold open discussions among members about next steps and increase engagement with the private sector to gain their expertise on risks and vulnerabilities.
Understanding the regulatory debate requires grasping what these standards mean in practice. The Basel Committee on Banking Supervision sets global standards for bank regulation, with member countries typically adopting them into national law. Capital requirements determine how much money banks must hold against different types of assets to protect against losses. Higher capital requirements for crypto holdings mean banks must set aside more funds, making it less profitable to offer crypto services or hold digital assets.
Stablecoins are cryptocurrencies designed to maintain a stable value, typically pegged to traditional currencies like the U.S. dollar. Unlike Bitcoin or Ether, which fluctuate significantly in price, stablecoins aim to provide the benefits of digital assets while minimizing volatility. This stability has made them increasingly popular for payments and trading.
What Comes Next
The debate over bank crypto standards reflects broader tensions between innovation and financial stability. Regulators must balance enabling technological advancement against protecting the banking system from potential risks that remain poorly understood. The outcome will likely shape how traditional financial institutions engage with digital assets for years to come.