Basel considers rule review amid stablecoin boom

The meteoric growth of stablecoins is prompting global banking regulators to reconsider how traditional banks should treat ￰0￱ Thedéen, the chair of the Basel Committee on Banking Supervision and governor of Sweden’s central bank, the Riksbank, said that regulators are currently focused on ￰1￱ central bankers also stated that they were closely monitoring developments related to these so-called stablecoins, which are digital tokens linked to traditional currencies such as the dollar or euro, providing one-to-one value. Thedéen said at a conference in Washington on Wednesday, during the IMF meetings, that the Basel Committee could revise its current crypto capital framework, given the significant changes in the digital asset landscape since ￰2￱ considers rule review amid stablecoin boom When, in 2022, the Basel Committee wrote its crypto capital rules, stablecoins were ￰3￱ policymakers at the time were more concerned about volatile assets such as Bitcoin and Ethereum.

However, since then, stablecoins have experienced a surge in use and value — tokens like Tether (USDT) or USD Coin (USDC), for example, now facilitate billions of dollars’ worth of transactions every day ￰4￱ the current regime, most stablecoins are considered highly risky crypto assets, and banks must maintain equal amounts of capital against them as they would against much more volatile cryptocurrencies. Thedéen admitted that this blanket approach may no longer be suitable for today’s evolving market, as newer stablecoins are increasingly backed by liquid assets such as short-term US ￰5￱ new capital rules, which were set to take effect in 2026, would have made it far more expensive for banks to dabble in crypto ￰6￱ finance industry has stated that such treatment is excessively punitive and stifles innovation, especially at a time when several global banks have been experimenting with issuing their own stablecoins, which are pegged to major currencies, including the US dollar, the euro, and the yen.

Thedéen emphasized that any revision of the rules would undergo a very thorough process involving all Basel member ￰7￱ noted that some members had already adopted parts of the package, suggesting that any amendments would require broad ￰8￱ Basel Committee’s latest signal comes as regulators worldwide are increasingly scrutinizing the stablecoin ￰9￱ Bank for International Settlements (BIS) had just cautioned that the widespread use of stablecoins could increase risks to the financial system , particularly if the tokens were to be used in payments and ￰10￱ Systemic Risk Board, for its part, suggested that banks or shadow lenders could hold stablecoins issued in multiple countries to a range of users from across the ￰11￱ European Central Bank (ECB) has also urged closer supervision to close any regulatory ￰12￱ the United States, Congress passed the Stablecoin Act, establishing national standards for stablecoin ￰13￱ Act ensures that issuers maintain 1:1 reserves in high-quality liquid assets and provide clear redemption rights to ￰14￱ Bank of England has just indicated that it will only lift its proposed cap on stablecoin payments when it is certain that there can be no impact whatsoever on financial stability as a result of this ￰15￱ push back against punitive capital charges Key banks and trade associations, such as the GFMA, have warned the Basel Committee against delaying or reconsidering its forthcoming crypto ￰16￱ state the market has advanced beyond 2022, with better governance, transparency, and collateralisation for the majority of top ￰17￱ GFMA stated in an August letter to the committee that the proposed rules could make it increasingly uneconomical for regulated UK financial institutions to offer cryptoasset custody and payment ￰18￱ group further urged the committee to adopt data-driven adjustments that would better reflect the reduced risk profile of stablecoin issuers with strong performance ￰19￱ up to $30,050 in trading rewards when you join Bybit today