A little-known 1,250% rule could lock US banks out of Bitcoin
Six Republican senators urged US bank regulators to replace Basel’s 1,250% risk weight for Bitcoin and similar cryptoassets with a new, calibrated capital framework. They argue the rule effectively blocks banks from holding Bitcoin because it can require capital equal to or greater than the exposure, making such positions uneconomic even if legally permitted. The letter comes as Congress advances the CLARITY Act, which would expand banks’ role in digital asset markets, but the senators say legal permission is meaningless without workable capital treatment. Regulators have recently loosened crypto restrictions, and the senators point to 2026 guidance treating tokenized securities like their non-tokenized counterparts as evidence for technology-neutral treatment. They contend Bitcoin’s volatility and custody risks can be managed with lower, risk-based charges. Basel is already reviewing its crypto standard, and the senators want US agencies to act now so banks can participate in crypto markets beyond custody and settlement.
