Six Republican senators sent a letter on May 27 pressing the OCC, FDIC, and Federal Reserve to craft a new capital framework for digital assets. The core target: the Basel Committee's 1,250% risk weight for Bitcoin, which requires banks to set aside an amount equal to their entire exposure — effectively killing the economics of holding or servicing the asset.
How the rule works — and why it stings
Under the current Basel standard, a bank holding $100 million in Bitcoin must allocate $100 million in capital. Many banks operate with internal capital targets above the regulatory minimum of 8% — say 12%. That pushes the required reserve to $150 million on the same $100 million exposure, well past any profit margin a custody or trading desk could generate. The senators argue that makes the business unviable, locking banks out of a market their clients increasingly want to access.
The CLARITY Act can't do it alone
The letter lands a few weeks after the CLARITY Act cleared the Senate Banking Committee on May 14 by a 15-9 vote. That bill would give banks statutory roles in digital asset markets, but it won't change the capital math. Without adjustments to the Basel rule, the legislative fix stays hollow — banks still can't afford to touch bitcoin under the current risk weight.
Regulators have already moved — but not far enough
The OCC scrapped its non-objection requirement for crypto activities in March 2025. The FDIC rescinded notification rules the same month. The Fed withdrew its prior crypto guidance in April 2025. Then in March 2026, an interagency FAQ clarified that tokenized securities would be treated like traditional assets. But the FAQ left native crypto assets — Bitcoin, Ethereum, the ones that started this whole conversation — in limbo. That unresolved gap is exactly what the senators are now pushing to close.
Where the 1,250% rule came from
Regulators based the punitive weight on a 2023 joint statement that cited Bitcoin's volatility, legal uncertainty, and operational risks — lessons drawn from the 2022 crypto collapse. The senators' letter doesn't dispute those risks. Instead, it argues for a framework that distinguishes native digital assets from tokenized versions of traditional securities, and for a capital charge that reflects actual risk rather than one that bans the activity by cost.
The letter asks the regulators to respond. There's no deadline yet, but the political pressure is building. The CLARITY Act still needs a full Senate vote, and the industry is watching whether the capital rule will move alongside it — or force lawmakers to tackle the Basel problem directly.
