Trade Associations Call for Revision of BCBS Cryptoasset Standards Ahead of 2026 Implementation

Trade Associations Demand Revision of BCBS Cryptoasset Standards

Briefing Note: Strategic Implications of Trade Association Calls for Change in BCBS Cryptoasset Standards

• The latest move by prominent financial trade associations places the upcoming Basel Committee on Banking Supervision (BCBS) Cryptoasset Exposures Standard (SCO60) at the center of industry and regulatory focus. This collective advocacy holds material significance for major banks, digital asset investors, and technology providers navigating the evolving regulatory environment.

Background and Stakeholder Alignment: BCBS, Joint Trades & Market Dynamics

The Basel Committee on Banking Supervision (BCBS), a globally respected standard setter, currently mandates stringent capital requirements for cryptoasset exposures under the Cryptoasset Exposures Standard (SCO60). The Joint Trades—a coalition including the Global Financial Markets Association (GFMA), Bank Policy Institute (BPI), Securities Industry and Financial Markets Association (SIFMA), Futures Industry Association (FIA), Financial Services Forum (FSF), Global Blockchain Business Council (GBBC), Global Digital Finance (GDF), Institute of International Finance (IIF), and International Swaps and Derivatives Association (ISDA)—jointly advocate for a strategic pause and recalibration of these standards ahead of the scheduled January 2026 implementation.

The Joint Trades, reflecting leadership from senior executives at GFMA, BPI, and SIFMA, outline concerns integral to capital allocation and innovation. As key stakeholders, GFMA, BPI, SIFMA, and their members assert that SCO60 includes capital surcharges they characterize as “excessively conservative” and “overly punitive”, arguing the regime fails to reflect actual risk profiles and is inconsistent with contemporary market risk management practices.

Stakeholder implications are material. For major banking institutions, including those represented by GFMA, BPI, and SIFMA, the current capital requirements under BCBS could constrain liquidity and risk appetite for digital assets. For investors and fund managers, this translates into reduced market efficiency and diminished opportunities in the rapidly evolving digital asset space. For fintech providers and blockchain innovators, the regulatory approach signals either a clear path to responsible integration or, if unchanged, a continued barrier to mainstream adoption.

Technical Context: Distributed Ledger Technology and Capital Markets Transformation

A technical report, jointly produced by the Joint Trades with partners Boston Consulting Group (BCG), Ashurst, and Sullivan & Cromwell LLP, supports this advocacy by emphasizing the transformative impact of distributed ledger technology (DLT) and tokenization. The report documents material efficiencies in securities issuance, collateral management, and fund operations, reinforcing the strategic potential for capital markets if allowed to integrate digital assets within a fit-for-purpose regulatory perimeter.

For high-net-worth clients, these developments imply:

• Potential barriers to entry: Under the current BCBS framework, banks must maintain steep capital buffers for cryptoasset exposures, discouraging large-scale institutional participation and signaling cost inefficiencies for custodianship and trade facilitation.
• Reduced allocation flexibility: Institutional portfolio managers, reliant on the capital markets infrastructure governed by GFMA, BPI, and SIFMA, may encounter restrictive compliance burdens that could reduce the attractiveness of digital asset investment vehicles.
• Innovation throttling: The punitive capital treatment could incentivize a shift in innovation offshore, with markets like the EU and select APAC jurisdictions poised to attract talent and liquidity if BCBS standards remain unchanged.

Advocacy Rationale: Strategic Requests by Joint Trades

The Joint Trades letter, co-signed by representatives from GFMA, BPI, and SIFMA, seeks:

• A pause in the final implementation of the SCO60 standard until a comprehensive, targeted consultation with industry stakeholders occurs.
• Revisions to the capital treatment of cryptoassets to better align with observed risk profiles, supported by empirical market data and contemporary risk management protocols.
• Support for responsible innovation via regulatory recalibration, thereby encouraging banks to adopt distributed ledger technology and tokenization within secure supervisory boundaries.

As a seasoned observer, it is evident that the Joint Trades, comprising GFMA, BPI, SIFMA, and related entities, position this recalibration not as deregulation but as a modernization imperative needed for market relevance and competitive parity. For the BCBS, which retains a pivotal role in international financial stability, broader consultation may mitigate the risk of regulatory arbitrage and preserve its influence over global banks.

Comparative Regulatory Environment: Strategic Benchmarks

The Joint Trades, spearheaded by experts at GFMA, BPI, and SIFMA, reference comparative international benchmarks—most notably the EU’s Markets in Crypto-Assets (MiCA) regime and US regulatory proposals. BCBS standards, when misaligned, could precipitate fragmentation where market participants migrate to jurisdictions offering more balanced prudential treatment. This is particularly relevant for cross-border investment firms and multinational financial institutions represented by the Joint Trades coalition.

For high-net-worth stakeholders, regulatory divergence impacts portfolio diversification and capital mobility. It is essential to monitor advocacy outcomes by the Joint Trades, GFMA, BPI, and SIFMA, as alignment or discord among key jurisdictions directly affects investment strategy and counterparty risk management.

Market Infrastructure and DLT: Implications from Joint Trades’ Technical Report

The Joint Trades technical report—compiled with input from GFMA, BPI, and SIFMA—articulates DLT’s ability to:

• Reduce operational costs via direct settlement and real-time reconciliation.
• Increase transparency, improving auditability and risk controls across asset classes.
• Expand access to alternative assets and streamline fund operations for institutional investors.

Should BCBS recalibrate its standards as advocated by the Joint Trades, this transformation could unlock new risk-adjusted returns for high-net-worth investors and easier direct exposure for global banks under the GFMA, BPI, and SIFMA umbrellas.

Potential Risks and Forward-Looking Considerations

While the Joint Trades—including GFMA, BPI, and SIFMA—underscore the opportunities, they acknowledge the legacy risks highlighted by BCBS. The original capital surcharges imposed in response to historic crypto market upheavals (notably in 2022) remain salient, especially for risk officers within GFMA, BPI, and SIFMA member firms. These risks involve:

• Persistent volatility in unregulated cryptoassets.
• Technology reliability and systemic risk in permissionless networks.
• Legal ambiguities surrounding tokenized securities and collateral frameworks.

In advocating for recalibration, the Joint Trades—via GFMA, BPI, and SIFMA—do not recommend risk blindness but propose dynamic capital provision that evolves with market conditions, technology advances, and empirical stress testing.

Client Actions and Outlook: What High-Net-Worth Investors Should Monitor

• Engage with institutional counterparties: Review exposure policies and risk management practices for digital assets as defined by GFMA, BPI, and SIFMA guidelines. Confirm whether capital treatment is responsive to regulatory change.
• Assess jurisdictional alternatives: Evaluate domestic and offshore frameworks for digital asset custody, trade, and collateralization, prioritizing regions where regulatory clarity aligns with risk and innovation.
• Monitor strategic advocacy developments: Track progress of the Joint Trades’ negotiations with BCBS via GFMA, BPI, and SIFMA communications. Direct engagement with these bodies can offer early insights into capital and pricing changes.
• Evaluate direct and indirect exposures: For portfolios utilizing funds, derivatives, or alternative investments involving digital assets, reassess operational risk and compliance workflows in collaboration with prime brokers and custodians affiliated with GFMA, BPI, and SIFMA.

Outlook for Regulatory Negotiation: BCBS Response and Market Impact

The BCBS must navigate between preserving global banking stability and accommodating transformative financial technologies promoted by stakeholders in the Joint Trades, GFMA, BPI, and SIFMA. The window for negotiation—prior to January 2026—will shape both immediate capital cost scenarios and long-term competitive positioning for banks and asset managers worldwide.

For institutional and high-net-worth participants, vigilance regarding the outcome of the Joint Trades’ recalibration call remains essential. Communication channels through GFMA, BPI, SIFMA, and associated technical advisors will provide critical updates, while direct dialogue with BCBS and regulatory counsel may clarify implementation timelines and transition protocols.

Summary Table: Strategic Context and Stakeholder Impact

The role of the Joint Trades, as orchestrated by GFMA, BPI, and SIFMA, remains pivotal as industry leaders and clients await BCBS’s response—a development likely to set precedent for decades of digital asset regulation and capital markets innovation.