Basel 1,250% risk weight draws Bitcoin industry backlash
Executives of companies holding Bitcoin on their balance sheets are urging the Basel Committee on Banking Supervision (BCBS) to reconsider the 1,250% risk weight, which discourages banks from holding BTC and other cryptocurrencies due to the relatively high capital cost of digital assets.
The 1,250% capital requirement means that banks must fully back any Bitcoin (BTC) held on their balance sheets with approved capital on a 1:1 basis, making BTC custody more expensive than holding other asset classes.
Basel III risk weights for different asset classes held by banking institutions. Source: Jeff Walton
By comparison, cash, physical gold and sovereign bonds carry a 0% risk weight under Basel III, while the next-highest category after crypto — certain equities — carries a 400% risk weight.
According to Chris Perkins, president of investment firm CoinFund, the high capital charge on digital assets reduces banks’ return on equity — a critical measure of profitability — meaning Basel III capital rules effectively discourage banks from holding BTC and cryptocurrencies.
“This is a very subtle way of suppressing activity (of crypto companies), making these operations too expensive for banks,” Perkins said.
A bottleneck in the financial system
The Basel Committee first proposed the current risk weights in 2021, classifying BTC and other cryptocurrencies as the highest-risk assets and assigning them a 1,250% risk weight.
In 2024, the committee finalized the capital requirements outlined in the 2021 proposal, drawing sharp criticism from the crypto industry.
“If the United States wants to become the ‘crypto capital’ of the world, banking regulation must change. The risk is being mispriced,” wrote Jeff Walton, chief risk officer at Bitcoin asset manager Strive.
In October 2025, reports emerged that the committee was considering easing capital requirements for digital assets in response to the sharp growth in stablecoin market capitalization, which, according to RWA.xyz data, is approaching $300 billion.
The following month, BCBS Chair Erik Thedéen stated that the international banking regulator may need a “different approach” to the 1,250% crypto risk weight, signaling a potential shift in collateral requirements.
As we wrote, Henri Arslanian: Basel committee reviews crypto capital rules
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