Growth of Stablecoins Prompts Global Banking Regulator to Revisit Rules

Global banking watchdog, the Basel Committee on Banking Supervision (BCBS), is working to change how banks manage crypto assets, with a particular focus on stablecoins, as governments and financial groups push to relax strict capital rules scheduled to take effect in 2026.

The BCBS, which sets international banking standards, has reopened talks on changes to its 2022 crypto framework. The framework introduced exceptionally high capital requirements for digital assets, requiring banks to hold reserves equal to the entire value of unbacked cryptocurrencies such as Bitcoin. The rules, meant to protect lenders from losses, discouraged most from entering the crypto space.

However, the rapid growth of stablecoins and shifting government attitudes toward digital finance are forcing regulators to rethink their approach. The U.S. is leading efforts to revise the framework, arguing that the current standards no longer match how the crypto market functions today.

Stablecoins are becoming widely used for payments and settlements, with new laws such as the GENIUS Act giving them a clearer regulatory foundation. However, under the BCBS’s current framework, these tokens are treated as high-risk assets, subject to the same capital charges as volatile cryptocurrencies.

Banking executives say this approach has effectively excluded regulated institutions from a fast-growing segment of finance. A report from The Banker described the current system as “economically unviable” for financial institutions, pushing much of the trading activity to unregulated venues.

While the BSBS’s guidelines are non-binding, most member countries typically adopt them into national regulations. Even so, countries are taking different paths. Singapore has postponed implementation to 2027 to maintain global consistency, while Hong Kong is planning to introduce lighter rules for licensed stablecoins in 2026.

The EU is integrating the standards through the Capital Requirements Regulation and the MiCA framework. Draft regulations released in August by the European Banking Authority propose maintaining the 1,250 percent risk weight for unbacked crypto, but assigning a lower 250 percent charge for asset-backed stablecoins. The EBA also included transitional provisions to allow limited bank involvement in digital assets as the framework matures.

The U.K. is taking a cautious route as well. The Bank of England has indicated that the new rules will likely be conservative, with the Prudential Regulation Authority developing a framework known as CRYPTOPRU, expected by 2026.

In the U.S., regulators are reassessing how to apply prudential standards for stablecoins following the GENIUS Act’s passage. The Fed, FDIC, and OCC are now coordinating efforts to align domestic oversight with Basel’s principles.

Industry associations have urged the Basel Committee to reconsider what they describe as “cliff-effect” penalties. They argue that applying high-risk labels to tokenized government bonds simply because they exist on public blockchains contradicts the notion of technology-neutral regulation.

The ongoing debate reflects growing concern over how stablecoins could reshape international finance. A recent Standard Chartered report warns that by 2028, as much as one trillion dollars could leave emerging-market banks and flow into stablecoins, as savers look for more stable, dollar-linked alternatives.

The changes to the regulatory landscape for digital assets around the world will be watched by established companies like Circle Internet Group Inc. (NYSE: CRCL) to ascertain how the future trajectory of these assets could be influenced.

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