Republican Senators Press US Bank Regulators to Rework Bitcoin Capital Requirements

Six Republican senators on May 27 urged the Federal Reserve, the FDIC and the Office of the Comptroller of the Currency (OCC) to rewrite capital rules that shape how banks can engage with Bitcoin and other digital assets, arguing the current regime effectively prices banks out of the market. Led by Senator Cynthia Lummis, the group took aim at the Basel Committee on Banking Supervision's 1,250% risk weight for bank holdings of digital assets. Under that approach, banks effectively must hold capital equal to 100% of their Bitcoin exposure. A bank that carries $10 million of Bitcoin on its balance sheet would need to reserve $10 million of capital, which the senators labeled a "blanket penalty" and a "de facto ban." The lawmakers called for what they described as a "risk-based, technology-neutral capital framework" for on-balance-sheet digital asset holdings, seeking treatment aligned with an asset's underlying risk rather than a punitive multiplier. They pointed to a March 2026 interagency clarification as a sign regulators are already moving in that direction. The guidance aligned capital treatment for tokenized securities with the capital treatment of their underlying assets, such as granting a tokenized Treasury bond the same treatment as the Treasury bond backing it. The senators urged regulators to extend that logic to a wider set of digital assets, including Bitcoin. In their view, the current framework reflects entrenched institutional caution rather than a genuine risk assessment. Fed Vice Chair Bowman has previously said US regulators are "not adopting those Basel risk weights" because they are unrealistic. The push comes as the Basel Committee itself reconsiders its posture. In November 2025, the committee said it would review its standards for crypto asset exposures. The letter also lands amid fresh legislative activity. The CLARITY Act (H.R. 3633) would broaden banks' authority to conduct digital asset activities, including custody, trading and other services that many traditional institutions have largely been unable to offer. The senators said clear regulatory guidance is necessary to expand these activities responsibly. For investors, any shift toward the senators' preferred approach would materially lower the hurdle for institutional Bitcoin adoption by reducing the need for dollar-for-dollar capital reserves tied to on-balance-sheet crypto holdings. Key signposts include whether the Fed, FDIC and OCC issue a formal response, how the Basel Committee's review develops through 2026, and whether the CLARITY Act advances beyond the committee stage.