Led by Senator Cynthia Lummis, a group of Senate Republicans has sent a letter to financial regulators, including the SEC and OCC, demanding fair capital rules for the on-balance sheet treatment of digital assets. The lawmakers argue that a lack of clear guidance forces banks to shoulder disproportionate capital burdens when holding crypto, deterring traditional financial institutions from offering digital asset custody services.
Current accounting guidance requires banks to recognize custodied crypto as a liability, inflating capital requirements. A long-time advocate for crypto-friendly policies, Lummis previously co-sponsored the Responsible Financial Innovation Act aimed at creating a clear regulatory framework. This latest push underscores her position that regulated banks should be allowed to handle customer digital assets with risk-appropriate measures, rather than being forced to hold excessive capital reserves.
The call comes amid broad bipartisan crypto regulation discussions in Congress. Regulators have yet to publicly respond. Clarifying the rules could open doors for bank-based crypto services, provided financial stability and consumer protections remain intact.