For the second time in three months a group of banking and capital market associations, including the Institute of International Finance (IIF) and Global Financial Markets Association (GFMA), wrote to the Basel Committee on Banking Supervision (BCBS) about revisiting the Basel crypto rules which restrict banks from fully participating in the digital assets, tokenization and stablecoin sectors. They request a postponement of the January 2026 implementation date, and ask for similar changes to the previous letter, with an added emphasis on stablecoins. The associations also published an updated DLT report showing the adoption of the technology by capital markets since the original Basel rules were formulated in 2022.
Banks have several reasons for the sense of urgency, given a lot has happened during the past three months. In May US banks were at the early stages of discussing a joint initiative targeting stablecoin issuance. That has progressed. In June Circle’s IPO was spectacular, with the stock reaching more than eight times its listing price. The GENIUS Act for stablecoins was signed into law in July. Bitcoin’s price reached another all time high. The SEC has made many accommodating announcements for the digital assets sector. But perhaps most importantly, at the end of July the White House published its digital assets paper, implying the US would not implement the Basel crypto rules as they currently stand.
These regulatory shifts have created momentum for banks to push for more favorable treatment of digital assets. The associations’ letter reflects these market changes, prioritizing permissionless blockchains while elevating stablecoins to prominent consideration. Tokenized assets, including stablecoins, that are issued on permissioned blockchains are considered similarly to conventional assets. By contrast, assets on permissionless blockchains are treated the same as cryptocurrencies, receiving a 1250% risk weighting, which translates to a need to set aside at least a dollar of capital for every dollar held on the balance sheet. “This binary distinction in capital charges is neither risk-sensitive nor economically rational,” the associations wrote. Second on the list are two new requests regarding stablecoins.
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