Republican Lawmakers, Led by Lummis, Urge End to Basel’s 1,250% Risk Weight for Digital Assets
Summary
- Republican lawmakers called for scrapping the Basel standard’s 1,250%% risk weight rule applied to digital assets.
- The crypto industry has criticized the 1,250%% risk weight for excessively limiting banks’ ability to hold digital assets and expand into custody and trading services.
- Markets are watching whether banks increase crypto business participation if US lawmakers and regulators ease capital rules tied to digital assets.
Forecast Trend Report by Period
Republican lawmakers led by US Senator Cynthia Lummis urged financial regulators to scrap the Basel framework’s 1,250% risk weight for digital assets.
The move comes as markets watch whether banks will expand their involvement in crypto-related businesses.
Binance News reported on June 4 that Lummis and other Republican lawmakers argued in a joint letter that current capital rules for digital assets are excessive.
The lawmakers said the 1,250% risk weight places undue limits on banks’ participation in the digital-asset market. They added that a new capital framework should be created to allow banks to take a more active role in the crypto market.
Under current Basel standards, some digital assets are assigned a 1,250% risk weight. That effectively requires banks holding those assets to set aside capital at a level roughly equal to the value of the assets.
The crypto industry has long criticized the rule, saying it places excessive constraints on banks seeking to hold digital assets or expand into custody and trading services.
Market participants expect bank involvement in crypto businesses to broaden if the US Congress and financial regulators ease capital rules related to digital assets.
JH Kim
reporter1@bloomingbit.ioHi, I'm a Bloomingbit reporter, bringing you the latest cryptocurrency news.
