Republican Lawmakers Urge Regulators to Scrap Basel’s 1250% Risk Weight for Digital Assets
Summary
- Republican lawmakers including Cynthia Lummis called for the repeal of the Basel Framework’s 1250%% risk weight applied to digital assets.
- The crypto industry has criticized the rule, saying it places excessive restrictions on banks seeking to expand into digital-asset holdings, custody and trading services.
- The market is raising the possibility of broader participation in crypto businesses by banks if Congress and US regulators ease capital regulations.
Forecast Trend Report by Period
Republican lawmakers led by US Senator Cynthia Lummis urged financial regulators to eliminate the Basel Framework’s 1250% risk weight for digital assets.
The issue is drawing market attention because it could shape whether banks expand their cryptocurrency businesses.
CoinDesk reported on June 4 that Lummis and other Republican lawmakers argued in a joint letter that current capital rules for digital assets are excessive.
They said the 1250% risk weight unduly limits banks’ participation in digital-asset markets and called for a new capital framework that would allow banks to take a more active role in the crypto market.
Under current Basel rules, some digital assets are subject to a 1250% risk weight. That effectively requires banks holding those assets to set aside capital roughly equal to their full value.
The crypto industry has long criticized the rule, arguing that it places excessive restrictions on banks seeking to hold digital assets or offer custody and trading services.
Market participants say bank involvement in crypto could broaden if Congress and regulators ease capital requirements related to digital assets.
