6 Senators Challenge 1,250% Bitcoin Capital Rule They Say Blocks Banks From Crypto
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A growing dispute in Washington over bank capital requirements could have major implications for institutional bitcoin adoption.
Key facts
A 1,250% risk weight, multiplied by the 8% minimum capital ratio, produces a capital requirement equal to 100% of the exposure—requiring banks to hold capital more than dollar for dollar equal to the amount of the digital assets
The Bitcoin Policy Institute made a similar case in a recent paper titled Basel’s 1250% Mistake
The organization argued that Basel’s 1,250% risk weight applies a penalty designed for opaque securitization tranches to bitcoin, despite BTC trading in transparent global markets
U.S. senators disclosed on June 4 a renewed push to overhaul bank capital rules governing digital asset exposure
Summary
The disputed 1,250% risk weight can require capital equal to exposure. U.S. senators disclosed on June 4 a renewed push to overhaul bank capital rules governing digital asset exposure. For investors, banks, and crypto firms, the issue could influence how deeply traditional finance enters bitcoin markets. A May 27 letter from Senators Cynthia Lummis (R-WY), Dan Sullivan (R-AK), Bill Hagerty (R-TN), Bernie Moreno (R-OH), Ted Budd (R-NC), and Jon Husted (R-OH) urged the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) to revisit digital asset capital standards.