Bitcoin is approaching the Federal Reserve’s 2026 stress evaluations, posing significant capital risks for regulated financial institutions.

Pierre Rochard’s suggestion for the Federal Reserve to incorporate Bitcoin into its stress tests emerged at a peculiar time: the Fed is currently seeking public feedback on its scenarios for 2026 while also proposing new transparency standards regarding how it formulates and revises those models.

This timing raises a pertinent question that transcends the validity of Rochard’s particular assertions: can the Fed ever consider Bitcoin as a variable in stress tests without officially adopting it as policy?

The response does not hinge on ideology. It relates to infrastructure.

The Fed will not mainstream Bitcoin merely because a former strategy chief requests it. However, if banks’ exposures to Bitcoin through custody, derivatives, ETF mediation, or prime-brokerage-like services become significant enough to influence capital or liquidity metrics consistently, the Fed may ultimately have to model BTC price shocks similarly to how it models equity drawdowns or credit spreads.

This transition would not imply endorsement. It would indicate that Bitcoin had become too integrated into regulated balance sheets to disregard.

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What stress tests actually assess

The Fed’s supervisory stress tests directly contribute to the Stress Capital Buffer, which represents the extra capital that large banks are required to maintain above regulatory minimums.

The tests estimate losses and revenues under adverse conditions and then convert those estimates into necessary capital. The design of scenarios is crucial as it ensures comparability across institutions: banks that encounter the same hypothetical shock are evaluated under the same conditions.

For 2026, the Fed has proposed scenarios that span from the first quarter of 2026 to the first quarter of 2029, utilizing 28 variables.

This set comprises 16 U.S. metrics: six activity indicators, four asset prices, and six interest rates.
Internationally, the Fed models 12 variables divided among four regions: the euro area, the UK, developing Asia, and Japan. These models track real GDP, inflation, and exchange rates in each region.

Subhead	Variables	Count
Economic activity & prices	Real GDP growth; Nominal GDP growth; Real disposable personal income growth; Nominal disposable personal income growth; CPI inflation (CPI-U); Unemployment rate	6
Asset prices / financial conditions	House price index; Commercial real estate (CRE) price index; Equity prices (U.S. Dow Jones Total Stock Market Index); Stock market volatility (VIX)	4
Interest rates	3-month Treasury rate; 5-year Treasury yield; 10-year Treasury yield; 10-year BBB-rated corporate yield; 30-year fixed mortgage rate; Prime rate	6

The Fed has explicitly stated that the 2026 set mirrors the 2025 set. Bitcoin is not included.

Banks with extensive trading operations encounter an additional global market shock component that stresses a wider array of risk factors, including equity indices, credit spreads, commodity prices, foreign exchange, and volatility surfaces.

Banks with significant trading or custody operations are also assessed under a counterparty default scenario.

These components present a natural opportunity for Bitcoin: the Fed could integrate a BTC shock into the global market shock framework without categorizing it as a central macroeconomic variable.

Country / bloc	Real GDP (growth)	Inflation (CPI or local equivalent)	USD exchange rate (level)
Euro area	Euro area real GDP growth	Euro area inflation	USD/euro
United Kingdom	U.K. real GDP growth	U.K. inflation	USD/pound
Developing Asia	Developing Asia real GDP growth	Developing Asia inflation	F/USD (index)
Japan	Japan real GDP growth	Japan inflation	yen/USD

What would qualify Bitcoin

Four criteria must align before the Fed considers Bitcoin as a scenario input, none of which necessitate the Fed to take a stance on Bitcoin’s long-term sustainability.

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

This is not a Bitcoin-specific benchmark, but it serves as a realistic measure for “significant enough to matter.” If a 50% Bitcoin drawdown coupled with a volatility spike could reduce a bank’s projected CET1 ratio by 20 basis points, the Fed has a supervisory rationale to model it.

The next criterion is repeatability. The shock must manifest as a consistent driver of losses or liquidity stress, rather than a one-time event.

Bitcoin’s history of sharp declines, frequently coinciding with equity selloffs and tighter funding conditions, provides the Fed with a reference point for calibration. If Bitcoin behaves like a leveraged risk-on asset during periods of stress, it starts to resemble other factors the Fed already models.

The subsequent step involves mapping into bank balance sheets. The Fed requires a clear transmission mechanism from a Bitcoin move to profit-and-loss or liquidity for regulated institutions.

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

The final criterion is data auditability. The Fed requires a defensible, monitorable data series.

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

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Why now feels different

Three developments in 2025 diminished the barriers to bank-related Bitcoin activities and made future inclusion in stress tests more likely.

The Fed retracted previous guidance on crypto-asset activities and transitioned to “normal supervisory process” oversight. The OCC issued guidance on crypto-asset safekeeping and, in Interpretive Letter 1188, confirmed that national banks may engage in riskless principal crypto-asset transactions.

The SEC annulled Staff Accounting Bulletin 121 via SAB 122, eliminating an accounting treatment widely regarded as an obstacle to bank custody.

ETFs have evolved into a bank-adjacent market structure. BlackRock’s IBIT alone reported $70.24 billion in net assets as of January 20.

The Banque de France indicated that ETF authorized participants are often broker-dealer subsidiaries of U.S. global systemically important banks, with some U.S. G-SIBs reporting over $2.7 billion in crypto-ETF investments by the end of 2024.

Authorized participants create and redeem ETF shares, hedge flows, and provide liquidity, which are activities that reside 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 as it approaches 2026. It has published proposed scenarios and explicitly requested public feedback. Additionally, it has put forth a separate proposal on stress-test transparency and public accountability, detailing new documentation requirements and a schedule for reviewing significant model changes.

This stance makes exploratory scenario elements, such as assessing emerging risks without embedding them in binding capital requirements, more institutionally feasible than in the past.

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What changes if Bitcoin is included

Incorporating Bitcoin into stress tests would not equate to endorsement. It would standardize the manner in which banks model crypto-related risks and eliminate the current patchwork of ad hoc proxies, such as equity volatility plus tech drawdowns.

Furthermore, banks would have a unified framework for comparison, enhancing comparability across institutions.

This would implicitly normalize Bitcoin as a modeled risk factor. Once the Fed regards Bitcoin like interest rates or equity indices—something that can transmit stress and must be projected under adverse conditions—it becomes increasingly challenging to dismiss crypto exposures as marginal activities.

This transition could tighten regulations and compliance surrounding crypto-related business lines.

Banks would treat such activities more akin to other capital-sensitive sectors: implementing stricter limits, governance, model validation, documented hedging assumptions, and more detailed data collection.

The Fed already possesses the authority to incorporate scenario components based on a bank’s activities and risk profile. Bitcoin could initially emerge as a targeted component for banks with significant crypto intermediation rather than as a universal macro variable.

This tiered structure provides a logical pathway forward.

How Bitcoin could integrate into the stress-test framework

Three implementation tiers appear plausible over time, each triggered by increasing bank exposure.

Tier 1 involves a trading-book Bitcoin shock within the global market shock, representing the most likely initial step.

Crypto-related trading, hedging, and ETF facilitation at G-SIB broker-dealers would initiate a Bitcoin spot shock, a volatility shock, and a basis/liquidity shock that influence margin and counterparty exposures. This is precisely the type of component stress test that is already employed for other asset classes.

Historically consistent ranges might encompass a 50% to 80% Bitcoin decline over a brief period, with implied volatility doubling or tripling and liquidity demands surging linked to price gaps and margin calls.

Tier 2 entails treating Bitcoin as a supervisory variable. This is more complex and requires comprehensive bank mapping.

Multiple banks would need to demonstrate significant, measurable Bitcoin-linked profit-and-loss sensitivity over various quarters, such as through custody, lending to ecosystem participants, derivatives, and prime-like financing.

The Fed would need to develop and validate supervisory models that, in a repeatable manner, convert Bitcoin trajectories into losses, fee income, and liquidity stress.

Tier 3 represents an exploratory Bitcoin scenario. This becomes feasible during the current era of transparency. The Fed could release an exploratory sensitivity analysis alongside the main test, examining crypto-TradFi spillovers without embedding Bitcoin in binding capital requirements.

The current 2026 transparency approach makes this more institutionally achievable than it was previously.

The governance counterweight

Bank trade associations generally argue that the Fed should maintain discretion in scenario design and ensure that transparency requirements do not induce distortions or mechanical capital impacts that are detached from actual risk.

The Fed itself has acknowledged that incorporating “salient risks” through scenarios can hinder the ability to assess other emerging risks and elevate the burden.

This serves as a sober institutional justification for why Bitcoin will not appear in stress tests until exposures warrant it: not due to opposition from the Fed, but because scenario design acts as a capital-allocation instrument with tangible effects on bank behavior.

The essential question is not whether the Fed will “adopt Bitcoin.” The inquiry is whether Bitcoin exposures at regulated banks will grow sufficiently large and become sufficiently integrated into trading, custody, and intermediation activities that the Fed can no longer assess bank resilience without factoring in Bitcoin shocks.

If that occurs, Bitcoin will not be included in stress tests as a policy declaration. It will be included because the Fed has exhausted its options to ignore it.

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