SEC Restarts Crypto Custody Rulemaking: Banking Giants Race into Global Stablecoins, RWA and Tokenization Wave Accelerates

The U.S. Securities and Exchange Commission (SEC) has been active in crypto asset regulation recently, issuing guidance covering token offerings and restarting the rulemaking process for crypto asset custody. Meanwhile, traditional financial giants are accelerating their deployment in stablecoins and tokenization, and global regulators are also following up on upgrades to digital currency infrastructure. This article summarizes noteworthy regulatory and market developments.

SEC Restarts Crypto Custody Rulemaking

The SEC is moving forward again with rulemaking on crypto asset custody. In 2023, the agency attempted to strictly limit where investment advisers could custody client crypto assets, but the effort did not materialize. Now, the SEC is again trying to regulate crypto asset safeguarding to address the industry's pressing questions about compliance with existing custody fee rules.

This week, the SEC submitted the concept proposal to the White House Office of Management and Budget (OMB) for review. The proposal will remain at OMB for a period before formal rulemaking begins. According to the SEC's public regulatory agenda, future actions will improve and modernize custody fee rules for investment adviser client assets and fund assets, including those involving crypto assets. In addition to clarifying compliance requirements for a rapidly evolving market, the proposal will also remove unnecessary burdens from certain outdated provisions to adapt to changes in markets, securities trading, and holding practices.

The current SEC leadership takes a constructive stance toward crypto assets. Its goal is not to stifle innovation but to create conditions for the custody, adoption, and innovation of crypto assets while protecting consumers. The previous White House crypto summit signaled that if legislation cannot be passed in time, regulators will provide rulemaking and guidance to promote crypto asset adoption.

Major Banks Advance Global Stablecoin Plans

According to The Wall Street Journal, more than a dozen large banking institutions, including Bank of America, Wells Fargo, and Santander, are advancing a global stablecoin project, initially pegged to the U.S. dollar and potentially expanding to the euro later. JPMorgan is also evaluating the possibility of launching a stablecoin, though discussions are still in early stages.

Traditional banks previously lobbied against crypto companies issuing deposit-like stablecoins, favoring tokenized deposits that keep funds within the banking system. Now, these institutions are building their own stablecoin solutions, reflecting recognition of the long-term value of blockchain technology.

Stablecoin Ecosystem Blooms on Multiple Fronts

The stablecoin market has shown multifaceted growth recently. Ripple's RLUSD stablecoin has surpassed a market cap of $2 billion, with approximately $963 million issued on the XRP Ledger and about $1.1 billion on Ethereum. The stablecoin has not been live for long, and such growth reflects increased network effects and adoption.

In Europe, Revolut has begun offering its euro stablecoin EURR to select customers in Denmark, Poland, and Portugal. South Korea's Shinhan Financial Group is collaborating with Visa to test stablecoin issuance and B2B settlement, becoming the first top-tier Korean financial group to formally adopt Visa's enterprise-grade stablecoin infrastructure. These developments indicate that stablecoin applications are moving from proof-of-concept to actual deployment worldwide.

Japan Launches Stock and Bond Tokenization Plan

Japanese regulators plan to start development work on stock and bond tokenization this year to modernize the national settlement system and prevent institutional investors and foreign capital from flowing overseas. The Financial Services Agency, Ministry of Finance, and Bank of Japan will form a working group this summer, aiming to begin formal work in early 2027. If testing goes smoothly, the new on-chain system is expected to be operational in the early 2030s.

The plan will promote banks converting part of their reserve accounts at the Bank of Japan into digital tokens as a wholesale central bank digital currency (CBDC), limited to use among financial institutions. The new infrastructure will significantly shorten settlement times for stocks and government bonds from T+2 and T+1 to near-instant settlement, enabling atomic settlement.

Ethereum Developers Propose Quantum-Resistant Scheme

Ethereum developers have proposed an initial draft aimed at protecting ETH staking from quantum computing attacks. The draft allows validators to deposit using quantum-resistant keys and gradually stops accepting the current key format used by the network. This move marks the beginning of blockchain projects preparing for the quantum computing era, with significant implications for the many tokens, stablecoins, and Layer 2 networks built on Ethereum.

Bitcoin-Backed Mortgage Product Launches

Better Mortgage has partnered with Coinbase to launch a Bitcoin-backed mortgage product, allowing U.S. homebuyers to use Bitcoin as collateral for a down payment loan without selling their Bitcoin. Borrowers must pledge Bitcoin worth at least 250% of the down payment loan, and the pledged assets are transferred to Better's custody account at Coinbase Prime. The product combines a Fannie Mae-backed home loan with a separate Bitcoin-collateralized down payment loan, with the same interest rate and amortization period for both loans, consolidated into a single monthly payment. Once the loan is paid off or refinanced, the pledged Bitcoin is returned to the borrower.

This model provides a new liquidity option for homebuyers holding crypto assets, avoiding capital gains tax from selling assets. The model may expand to other crypto assets such as Ethereum and XRP in the future.

Regulation and Innovation in Parallel

The SEC's custody fee rulemaking and the accelerating global push for stablecoins and tokenization together paint a picture of crypto assets integrating into mainstream finance. Regulators are seeking to provide a clear compliance framework for the market, while the active participation of traditional financial institutions further validates the long-term potential of blockchain technology. For market participants, closely monitoring regulatory developments and infrastructure upgrades can help grasp the trajectory of industry evolution.