BIS’s new crypto asset standards favor permissioned stablecoins over permissionless ones.
Caitlin Long criticizes the BIS’s decision, seeing it as backward innovation.
The framework also requires banks to provide standardized qualitative information about their crypto activities.
The Bank for International Settlements (BIS), through the Basel Committee on Banking Supervision, has announced targeted amendments to its crypto asset standards. These amendments prioritize stablecoins issued on permissioned blockchains over those on permissionless ones, a regulatory shift set to take effect on January 1, 2026.
The #BaselCommittee has published targeted amendments to its cryptoasset standard to tighten the criteria for certain stablecoins to receive a preferential regulatory treatment. The standard is to be implemented by 1 Jan 2026. More here: https://t.co/EL2aad1YgP pic.twitter.com/0NQkmck8Fw
— Bank for International Settlements (@BIS_org) July 17, 2024
The amendments aim to clarify the prudential treatment of stablecoins, granting preferential “Group 1b” regulatory status to those on permissioned blockchains. This decision could significantly impact banks and their crypto asset exposures, as permissioned stablecoins will now receive more favorable treatment under the new standards.
Crypto industry observers have expressed concern that the BIS’s decision to favor permissioned stablecoins could hinder the adoption of more decentralized, permissionless blockchain technologies.
Caitlin Long, Founder and CEO of Custodia Bank, voiced her apprehension in a recent post on X (formerly Twitter). She criticized the BIS for excluding stablecoins on permissionless blockchains from bank use and favoring those on permissioned blockchains.
Long views the approach as a step backward from BIS’s initial forward-thinking approach to crypto adoption. Moreover, Long speculated that the U.S. might not follow the BIS’s lead and potentially continue to support the use of permissionless stablecoins.
WELP, @BIS_org just carved out #stablecoins issued on permissionless blockchains from use by banks & gave a regulatory advantage to permissioned stablecoins. The US will almost certainly just ignore this. It's a shame tho–BIS was leading the US on #crypto but just went backward. https://t.co/x0j14dJ8y7
— Caitlin Long 🔑⚡️🟠 (@CaitlinLong_) July 17, 2024
Another community member explained that the decision stems from banks’ unwillingness to relinquish their advantage, asserting that permissioned blockchains allow them to maintain power. They suggested that banks and governments would go to great lengths, potentially even deploying extreme measures, to retain control.
The BIS’s finalized disclosure framework now includes standardized tables and templates detailing banks’ exposures to crypto assets. These templates mandate that banks provide qualitative insights into their crypto asset-related activities and quantitative data on the capital and liquidity requirements associated with their crypto asset exposures.
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