Six Republican senators sent a letter to the Federal Reserve, FDIC, and OCC on May 27 demanding that regulators overhaul the capital rules that govern how banks interact with Bitcoin and other digital assets. The core complaint: the current framework makes it financially absurd for any bank to touch crypto.
The letter, spearheaded by Senator Cynthia Lummis, targets the Basel Committee on Banking Supervision’s 1,250% risk weight applied to bank holdings of digital assets. In English: that risk weight means banks must hold capital equal to 100% of their Bitcoin exposure. If a bank wants to hold $10 million in Bitcoin on its balance sheet, it needs to set aside $10 million in capital reserves just to do so.
The senators called this a “blanket penalty” and a “de facto ban.”
What the senators want
The letter pushes for what the senators describe as a “risk-based, technology-neutral capital framework” for banks’ on-balance-sheet holdings of digital assets. The idea is straightforward: assess crypto the same way you’d assess any other asset class, based on its actual risk profile rather than slapping it with a punitive multiplier.
