Global Finance Industry Associations Push Back on BIS Strict Crypto Rules, China Eyes Yuan Stablecoin Pivot (#221 – 24 August 2025)

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1. Global Finance Industry Pushes Back on BIS Crypto Rules

Some of the world’s top finance industry associations—including the IIF, BPI, ISDA, and SIFMA—have called on the Basel Committee to review its 2022 crypto restrictions before they come into effect in 2026.

These rules were passed following the collapse of FTX, and in practice, they make it extremely onerous for banks to get involved in crypto—from holding crypto or stablecoins on their balance sheets to even doing basic dealing in digital assets.

To use the language of their excellent letter:

"The Cryptoasset Standard’s restrictive qualification standards, combined with otherwise punitive market and credit risk capital treatments, effectively make it uneconomical for banks to meaningfully participate in the cryptoasset market. We believe the natural result of the uniquely conservative treatment in the Cryptoasset Standard is the entrenchment of a bifurcated market structure in which a growing sector operates largely outside the banking sector—not because of its risk, but because of the design of the prudential bank regulatory framework.

The prudential framework for those markets should not discourage participation by imposing overly punitive capital requirements that are inconsistent with actual risks. If banks choose to participate, they should be able to do so within a technology neutral framework that is proportionate and risk-sensitive."

The industry bodies argue that the regulatory landscape in 2025 is significantly different than it was in 2022. And they are right, of course.

But there are practical reasons as well. The Basel requirements are, in many cases, in direct contradiction to what the new U.S. rules are setting out, especially with regard to stablecoins under the GENIUS Act.

If these rules come into effect, they will put all major financial institutions in a difficult position, especially as most banks now are looking at their crypto strategy.

The BIS accepting a pause on these rules would allow the BIS to politely save face from the protectionist rules they put forward in 2022, and not put the banks in a difficult position.

This is why I believe they will use this letter as the reason to pause, after using a diplomatic answer like "we listened to the feedback of the industry."

Definitely a development to follow.

2. China Eyes Yuan-Backed Stablecoins for Global Trade

China is considering allowing the use of yuan-backed stablecoins for the first time in order to boost wider adoption of its currency globally—a major reversal of its previous stance on digital assets.

The State Council—China's cabinet—will review and possibly approve a roadmap later this month for increased global usage of the yuan.

If true, this would mark a significant policy reversal following China’s crypto ban in 2021.

This move is a direct response to the U.S. pivot. Currently, over 99% of stablecoins are U.S. dollar-denominated, and their usage in global trade is increasing daily.

If I were a betting man, I would say China will try to counter this via yuan-backed stablecoins (not the digital yuan CBDC, which will be used only domestically), leveraging Hong Kong's latest stablecoin regulations (which took effect on August 1). The focus will likely be on the Belt and Road Initiative countries—over 140 countries, more than 4 billion people, and over 40% of global GDP.

This is another example of the growing geopolitical role that crypto is playing and will continue to play in the future.

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Henri Arslanian

*Please note that this newsletter reflects Henri’s personal views and not those of any organisation he is involved with. This newsletter is for educational purposes only, and none of its content should be construed as investment or financial advice of any kind.