According to a CoinDesk report, U.S. Senator Cynthia Lummis, alongside several Senate Republicans, has formally called on financial regulators to repeal the Basel Committee on Banking Supervision's 1,250% punitive risk weight imposed on digital assets. The current capital requirement effectively forces banks to hold enormous capital reserves against any crypto exposure, severely limiting institutional involvement in the crypto market.
The lawmakers argue that the extreme weighting amounts to a regulatory barrier, and they are urging the agencies to develop a new capital framework that would enable banks to safely and meaningfully engage in crypto custody, trading, and related services. Under the existing rule, a bank holding $1 worth of crypto assets would need to set aside capital as if it held $12.50 in risk-weighted assets — a standard many view as a de facto prohibition for traditional financial institutions. The Basel Committee, as the primary global standard-setter for banking regulation, typically influences domestic rules worldwide; Lummis and her colleagues are pushing U.S. regulators to chart a different course that reflects the unique characteristics of digital assets.