Bitcoin is about to hit the Federal Reserve’s 2026 stress tests, creating a massive capital risk for regulated banks

Pierre Rochard’s call for the Federal Reserve to integrate Bitcoin into its stress tests came at an unusual moment: the Fed is soliciting public comment on its 2026 scenarios while simultaneously proposing new transparency requirements for how it builds and updates those models.

The timing creates a natural question that has nothing to do with whether Rochard’s specific claims hold up: can the Fed ever treat Bitcoin as a stress-test variable without “adopting” it as policy?

The answer isn’t about ideology. It’s about plumbing.

The Fed won’t mainstream Bitcoin because a former strategy chief asks nicely. But if bank exposures to Bitcoin through custody, derivatives, ETF intermediation, or prime-brokerage-style services become large enough to move capital or liquidity metrics in a repeatable way, the Fed may eventually be forced to model BTC price shocks the same way it models equity drawdowns or credit spreads.

That shift wouldn’t signal endorsement. It would signal that Bitcoin had become too embedded in regulated balance sheets to ignore.

What stress tests actually test

The Fed’s supervisory stress tests feed directly into the Stress Capital Buffer, the amount of capital large banks must hold above regulatory minimums.

The tests project losses and revenues under adverse scenarios, then translate those projections into required capital. Scenario design matters because it determines comparability across firms: banks that face the same hypothetical shock are evaluated on the same terms.

For 2026, the Fed proposed scenarios that run from the first quarter of 2026 through the first quarter of 2029 and use 28 variables.

The set includes 16 US metrics: six activity indicators, four asset prices, and six interest rates.
Internationally, the Fed models 12 variables across four blocs: the euro area, the UK, developing Asia, and Japan. The models track real GDP, inflation, and exchange rates in each.

The Fed explicitly noted that the 2026 set is identical to the 2025 set. Bitcoin isn’t in it.

Banks with large trading operations face an additional global market shock component that stresses a broader set of risk factors, such as equity indices, credit spreads, commodity prices, foreign exchange, and volatility surfaces.

Banks with substantial trading or custody operations are also tested under a counterparty default scenario.

These components offer a natural entry point for Bitcoin: the Fed could fold a BTC shock into the global market shock framework without treating it as a core macroeconomic variable.

What would make Bitcoin eligible

Four criteria would need to align before the Fed treats Bitcoin as a scenario input, and none of them requires the Fed to take a position on Bitcoin’s long-term viability.

The first is materiality. Exposures must be large enough to move post-stress capital ratios meaningfully. The Fed’s own transparency proposal discusses “material model changes” in terms of their impacts on projected Common Equity Tier 1 ratios, with thresholds ranging from 10 to 20 basis points.

That’s not a Bitcoin-specific benchmark, but it’s a realistic yardstick for “big enough to matter.” If a 50% Bitcoin drawdown paired with a volatility spike could push a bank’s projected CET1 ratio down by 20 basis points, the Fed has a supervisory reason to model it.

The next criterion is repeatability. The shock must show up as a recurring driver of losses or liquidity stress, not a one-off headline.

Bitcoin’s history of sharp drawdowns, often coinciding with equity selloffs and tighter funding conditions, provides the Fed with a benchmark to calibrate against. If Bitcoin behaves like a levered risk-on asset during stress episodes, it starts to look like other factors the Fed already models.

Then comes mapping into bank balance sheets. The Fed needs a clean transmission channel from a Bitcoin move to profit-and-loss or liquidity for regulated firms.

Plausible channels now include broker-dealer intermediation for ETFs, custody, riskless principal execution, and derivatives margining.

The last is data auditability. The Fed needs a defensible, monitorable series.

Bitcoin increasingly has institutional-grade reference points, such as BlackRock’s IBIT, which references the CME CF Bitcoin Reference Rate. That makes Bitcoin easier to define in a stress scenario than many niche credit markets.

Why now feels different

Three developments in 2025 lowered the barriers to bank-adjacent Bitcoin activity and made future stress-test inclusion more plausible.

The Fed withdrew prior guidance on crypto-asset activities and shifted to “normal supervisory process” monitoring. The OCC issued guidance on crypto-asset safekeeping and, in Interpretive Letter 1188, confirmed that national banks may conduct riskless principal crypto-asset transactions.

The SEC rescinded Staff Accounting Bulletin 121 via SAB 122, removing an accounting treatment widely viewed as a custody roadblock for banks.

ETFs are now a bank-adjacent market structure. BlackRock’s IBIT alone reported $70.24 billion in net assets as of Jan. 20.

The Banque de France noted that ETF authorized participants are often broker-dealer subsidiaries of US global systemically important banks, and that some US G-SIBs reported more than $2.7 billion in crypto-ETF investments by end-2024.

Authorized participants create and redeem ETF shares, hedge flows, and provide liquidity, which are activities that sit on regulated balance sheets and can transmit Bitcoin volatility into funding and margin pressures.

The Fed is also in an unusual transparency and comment cycle heading into 2026. It published proposed scenarios and explicitly asked for public comment. It issued a separate proposal on stress-test transparency and public accountability, outlining new documentation requirements and a cadence for reviewing material model changes.

This posture makes exploratory scenario components, such as testing emerging risks without embedding them in binding capital requirements, more institutionally plausible than they were before.

What changes if Bitcoin gets included

Including Bitcoin in stress tests wouldn’t constitute endorsement. It would standardize how banks model crypto-related risks and eliminate the current patchwork of ad hoc proxies, such as equity volatility plus tech drawdowns.

Additionally, banks would get a common path to compare against, improving comparability across firms.

It would also implicitly mainstream Bitcoin as a modeled risk factor. Once the Fed treats Bitcoin like interest rates or equity indices, something that can transmit stress and must be projected under adverse conditions, it becomes harder to dismiss crypto exposures as fringe activities.

That shift could tighten controls and compliance around crypto-facing business lines.

Banks would treat those activities more like other capital-sensitive businesses: tighter limits, governance, model validation, documented hedging assumptions, and more granular data collection.

The Fed already has the latitude to add scenario components based on a bank’s activities and risk profile. Bitcoin could arrive first as a targeted component for banks with meaningful crypto intermediation rather than as a universal macro variable.

That tier structure offers a natural path forward.

How Bitcoin could enter the stress-test framework

Three implementation tiers seem plausible over time, each triggered by growing bank exposure.

Tier 1 is a trading-book Bitcoin shock inside the global market shock, and is the most likely first step.

Crypto-linked trading, hedging, and ETF facilitation at G-SIB broker-dealers would trigger a Bitcoin spot shock, a volatility shock, and a basis/liquidity shock that feed margin and counterparty exposures. This is exactly the kind of component stress test that stress tests already use for other asset classes.

Historically consistent ranges might include a 50% to 80% Bitcoin drawdown over a short horizon, implied volatility doubling or tripling, and liquidity demand spikes tied to price gaps and margin calls.

Tier 2 is treating Bitcoin as a supervisory variable. This is harder and requires broad bank mapping.

Multiple banks would need to show material, measurable Bitcoin-linked profit-and-loss sensitivity across quarters, like custody, lending to ecosystem participants, derivatives, and prime-like financing.

The Fed would need to build and validate supervisory models that, in a repeatable way, translate Bitcoin paths into losses, fee income, and liquidity stress.

Tier 3 is an exploratory Bitcoin scenario. This becomes possible during a transparency era like the current one. The Fed could publish an exploratory sensitivity analysis alongside the main test, exploring crypto-TradFi spillovers without embedding Bitcoin in binding capital requirements.

The current 2026 transparency posture makes this more institutionally feasible than it used to be.

The governance counterweight

Bank trade groups generally argue the Fed should preserve discretion in scenario design and ensure transparency requirements don’t create distortions or mechanical capital impacts divorced from real risk.

The Fed itself has noted that adding “salient risks” via scenarios can reduce the ability to test other emerging risks and increase the burden.

That’s the sober institutional reason Bitcoin won’t appear in stress tests until exposures justify it: not because the Fed opposes Bitcoin, but because scenario design is a capital-allocation tool with real consequences for bank behavior.

The question isn’t whether the Fed will “adopt Bitcoin.” The question is whether Bitcoin exposures at regulated banks will grow large enough and become embedded enough in trading, custody, and intermediation activities that the Fed can no longer model bank resilience without modeling Bitcoin shocks.

If that happens, Bitcoin won’t enter stress tests as a policy statement. It will enter because the Fed ran out of ways to ignore it.