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Senate Republicans Push Bank Regulators to Rewrite Crypto Capital Rules
Senate Republicans demand a formal rulemaking to replace ambiguous supervisory guidance on crypto capital charges. Without clarity, banks remain sidelined from digital asset services.
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A group of Senate Republicans is pressing the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation to revise bank capital rules for digital assets. The push targets the current treatment of crypto holdings under the Basel III framework, which assigns a high-risk weight to most unbacked crypto exposures. The senators argue the rules limit bank participation and put U.S. institutions at a competitive disadvantage internationally.
The group is calling for a formal notice-and-comment rulemaking to replace the current case-by-case supervisory guidance. No complete rule has been finalized, leaving banks uncertain about capital charges for custody, lending, and settlement of digital assets. Without a clear framework, most large banks have avoided offering direct digital asset services.
What the Capital Rule Request Targets
The core issue is risk-weighting. Under the Basel standards, unbacked crypto such as Bitcoin and Ethereum falls into a high-risk Group 2 classification that requires banks to hold capital equal to the full exposure. The Senate letter asks regulators to distinguish between different types of digital assets and to allow banks to use internal models for capital charges.
The U.S. has not yet implemented the Basel Committee's cryptoasset standard from December 2022. Instead, the three agencies have issued separate supervisory statements that warn banks against crypto activities without offering a clear path to compliance. This regulatory vacuum has kept institutional capital on the sidelines.
A formal rulemaking could clarify the rules. The strongest signals suggest a tri-agency proposal could appear in the third or fourth quarter of this year, with the timeline depending on continued political pressure and industry lobbying.