Bitcoin Policy Institute criticizes Basel rules for treating Bitcoin as a 'toxic' asset

The research group focused on Bitcoin (BTC), the Bitcoin Policy Institute (BPI), voiced dissatisfaction with the Basel framework, the international bank regulatory regime.

According to Cointelegraph, a digital-asset news outlet, Connor Brown, managing director at BPI, said on X (formerly Twitter) on the 13th (Korea time) that “under the current Basel framework, Bitcoin is being treated as a ‘toxic asset,’” adding that “when the Federal Reserve releases a proposed rule related to adopting the Basel standards, we will review it closely and submit comments so that appropriate regulation of Bitcoin is implemented.”

Brown said “the Basel framework applies a 1250% risk weight to Bitcoin,” noting that “this is effectively a far harsher regulatory level than for most assets.” He added that “such rules make it difficult for banks to provide financial services to Bitcoin investors or related companies.” Risk weights are a metric used to assess the riskiness of assets held by banks and determine the amount of required capital.

Meanwhile, the Federal Reserve is expected to soon publish a proposed rule to incorporate the Basel Committee on Banking Supervision (BCBS) standards on asset risk weights into U.S. bank regulation and begin the public comment process.