Comprehensive Analysis of Evolving Crypto Regulations
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The US Advocates for Revisions in Bank Crypto Standards
Recent reports indicate that the United States is spearheading efforts to prompt global financial regulators to reassess and modify existing standards for banks’ cryptocurrency holdings. This initiative is in response to significant regulatory changes and technological advancements within the crypto sector, particularly the burgeoning emphasis on stablecoin integration.
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Review of Global Crypto Standards by Regulatory Authorities
According to Bloomberg, discussions are underway among global regulators to potentially revise the regulations governing banks’ cryptocurrency holdings, which are slated to be enforced in 2026. The US has emerged as a vocal advocate for revisiting these standards, driven by the rapid expansion of the stablecoin industry.
In 2022, the Basel Committee on Banking Supervision (BCBS) established a framework for the “prudential treatment of banks’ exposures to cryptoassets.” This framework encompasses tokenized traditional assets, stablecoins, and unsupported digital currencies. Many senior financial executives have interpreted these standards as a deterrent to cryptocurrency engagement, primarily due to the substantial capital requirements they impose.
However, the cryptocurrency landscape has undergone significant transformation in recent years, prompting a shift in the regulatory stance of key players such as the US. This evolution has fueled discussions within the BCBS regarding the appropriateness of the existing rules in the current environment. Notably, major jurisdictions like the US and UK have yet to commit to timely implementation of these standards. Although the Basel Committee updated its crypto standards in 2024, their enforcement was postponed by one year.
Bloomberg sources indicate that the United States is actively advocating for amendments to these standards, contending that they are “misaligned with the industry’s growth,” particularly in the stablecoin domain. Several countries are reportedly sympathetic to the US perspective and support revisiting the standards before widespread implementation.
For example, the Bank of England (BoE) has expressed its commitment to developing a prudential framework for cryptoasset exposures and is actively engaging with international counterparts to promote regulatory consistency. Conversely, the Monetary Authority of Singapore (MAS) has delayed its new crypto prudential standards by a year, aligning them with BCBS measures, while the European Central Bank (ECB) prefers implementing existing standards with future revisions in mind.
Global Regulatory Landscape for Stablecoins
Despite the global momentum towards stablecoin adoption, regulatory challenges persist. The European Central Bank (ECB) has advocated for a ban on multi-issuance stablecoins within the bloc and other jurisdictions, following recommendations from the European Systemic Risk Board (ESRB). Meanwhile, the US banking sector has expressed reservations about the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, citing potential risks to the financial system.
Additionally, the Financial Stability Board (FSB), an international body tasked with overseeing the global financial system, has committed to addressing emerging threats posed by private finance and the increasing use of stablecoins. In June, the Financial Action Task Force (FATF) raised concerns about the rising risks associated with stablecoin adoption, emphasizing the potential misuse of digital assets by criminal entities, which poses a growing challenge to global financial security.
BoE Governor and FSB Chairman Andrew Bailey recently pledged to enhance the global regulatory response to the evolving risks associated with private finance and stablecoins. His commitment aims to develop a more agile and responsive policy framework to address emerging vulnerabilities effectively.
Bailey assured that international regulators would engage in “open and candid discussions among members” about the next steps and increase “outreach to the private sector to benefit from their expertise and insights on risks and vulnerabilities.”
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