ChainCatcher report: The Bitcoin Policy Institute (BPI) has announced it will submit public comments on the Federal Reserve’s upcoming proposal to implement the Basel framework, advocating for a revision in how BTC is treated in terms of risk weighting within the banking regulatory system. Conner Brown, Executive Director of BPI, stated that under the Basel framework, BTC is classified as a high-risk asset with a 1,250% risk weight—higher than nearly all other asset classes—and described this as “the most stringent classification.” In contrast, cash, physical gold, and government bonds all carry a 0% risk weight. A 1,250% capital requirement means banks holding BTC must hold compliant collateral at a 1:1 ratio, significantly increasing the cost of holding this asset and limiting banks’ ability to provide financial services to BTC-related businesses.
Bitcoin Policy Institute to Submit Comments to the Fed on BTC Risk Weight in the Basel Framework
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Summary
The Bitcoin Policy Institute (BPI) will submit public comments to the Federal Reserve regarding its Basel framework proposal, focusing on Bitcoin’s risk weight. BPI argues that Bitcoin’s 1,250% risk weight under the compliance framework is excessive, especially when compared to 0% for cash and gold. The high capital requirement impedes banks from supporting risk-on assets and Bitcoin-related businesses. Executive Director Conner Brown emphasized the need for regulatory adjustments to accurately reflect Bitcoin’s role in the financial system.
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