A Basel-derived capital rule requiring banks to hold $1.25 in reserves for every $1 of crypto exposure — effectively a 1,250% risk weighting — could prevent US banks from meaningfully participating in Bitcoin markets, a group of Republican senators warned in a May 27 letter. Addressed to Federal Reserve Vice Chair Michelle Bowman and FDIC Chair Travis Hill, the letter highlights a tension between the rule and congressional efforts to expand traditional finance's role in digital assets. The senators argue the requirement makes Bitcoin holdings economically unviable for banks, undermining broader crypto market integration goals. The warning comes as lawmakers push forward with legislation designed to give banks and other regulated institutions greater access to cryptocurrency services.
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