Senate GOP Criticizes Basel's 1,250% Crypto Risk Rule, Calls for Fairer Capital Framework

A group of Senate Republicans is pressing bank regulators to build a clearer, fairer capital regime for crypto — arguing that recent international standards would effectively shut banks out of the market. On Thursday, Senator Cynthia Lummis, chair of the Senate Banking Subcommittee on Digital Assets, joined Senators Dan Sullivan, Bill Hagerty, Bernie Moreno, Ted Budd and Jon Husted in sending a letter to the nation’s top bank supervisors — Federal Reserve Vice Chair for Supervision Miki Bowman, FDIC Chairman Travis Hill and Comptroller of the Currency Jonathan Gould — urging them to translate recent regulatory progress into a calibrated capital framework for crypto activities. The senators singled out the Basel Committee on Banking Supervision’s treatment of crypto, which assigned a 1,250% risk weight to crypto assets. That figure — used to calculate how much capital a bank must hold against an asset — is, in the lawmakers’ view, “the most punitive classification in the capital framework.” The letter argues the weight was not based on a calibrated assessment of actual digital-asset risk but functions as a blanket penalty and “a de facto ban on banks holding this asset class,” undermining agencies’ stated commitment to a technology-neutral approach. The lawmakers applauded a recent win for crypto clarity: joint guidance from the FDIC, OCC and Federal Reserve in March saying tokenized securities should generally receive the same capital treatment as their non-tokenized counterparts, and that capital should reflect the risk characteristics of the underlying asset — not the ledger technology used to record it. “That principle should apply consistently — including to other digital assets,” the senators wrote, and urged the agencies to begin developing a new capital framework now that Congress is moving on a crypto market-structure bill that would expand banks’ ability to hold crypto on their balance sheets. Their appeal came as the three regulators testified Thursday before the House Financial Services Committee about broader efforts to revisit post-2008 bank rules. In prepared remarks, FDIC Chair Travis Hill said the agency is implementing reforms aimed at a “more effective and efficient” supervisory framework that preserves both institution-level safety and systemic resilience. Hill emphasized the role of strong capital standards in ensuring a resilient banking system and noted the FDIC has proposed rules to oversee subsidiaries of FDIC-supervised insured depository institutions approved to issue payment stablecoins under the GENIUS Act. OCC Comptroller Jonathan Gould framed his agency’s approach as a return to risk-based supervision “rooted in law and emphasizing examiner judgment, not arbitrary checklists.” Gould said the OCC’s job is “to facilitate, not stymie, responsible innovation,” and added that the agency is reviewing enforcement actions and probing alleged “debanking” complaints in line with the President’s executive order. The senators’ letter pushes regulators to take those regulatory signals further — designing capital rules that are risk-calibrated, technology neutral and that allow banks to participate in the digital-asset economy without being effectively barred by punitive capital charges. Regulators now face pressure from lawmakers and industry alike to lay out how banks can safely engage with crypto while maintaining financial stability.