Senate Republicans push U.S. bank regulators to rework digital asset capital rules

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Senate GOP urges crypto rules

Highlights

Senate Republicans led by Sen. Cynthia Lummis urge the Federal Reserve, FDIC, and OCC to revise digital asset capital rules, criticizing the Basel Committee's 1,250% risk weighting.
The lawmakers advocate for a technology-neutral capital framework that enables banks to participate in digital asset markets, emphasizing accurate risk and opportunity reflection.
The letter highlights that consistent capital treatment for tokenized and non-tokenized assets, if expanded, would require regulators to update guidance as Congress weighs broader digital asset legislation.

Regulatory push targets capital treatment

As reported by The Block, a group of Senate Republicans led by Sen. Cynthia Lummis is pressing the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency to clarify capital standards for digital assets.

In a letter sent last week to Federal Reserve Vice Chair for Supervision Michelle Bowman, FDIC Chair Travis Hill and Comptroller of the Currency Jonathan Gould, the lawmakers say regulators should craft a fresh framework for digital assets. Bowman, Hill and Gould are testifying before the House Financial Services Committee on Thursday morning, and a statement on the letter is released the same day.

The senators criticize standards published over the years by the Basel Committee on Bank Supervision that assign a 1,250% risk weight to digital assets. That weighting affects how much capital a bank must hold against an asset, meaning higher-risk exposures require larger capital buffers.

In the letter, the lawmakers say any proposed capital treatment for on-balance sheet digital asset activities should accurately reflect both opportunities and risks and should be based, to the extent possible, on a technology-neutral approach. They argue that such an approach would give banks the authority to participate meaningfully in digital asset markets.

Sens. Lummis, Dan Sullivan, Bill Hagerty, Bernie Moreno, Ted Budd and Jon Husted sign the letter.

Broader implications for bank participation

The letter also points to a joint statement issued in March by the FDIC, the Federal Reserve and the OCC, which clarifies that tokenized securities should generally receive the same capital treatment as their non-tokenized forms. The senators say that principle should be applied consistently, including to other digital assets.

The push comes as Congress considers wider digital asset legislation that would expand banks' ability to engage in balance-sheet digital asset activities. The lawmakers say that if banks are authorized to conduct a broader range of such activities, regulators will need to provide corresponding capital guidance.

The Basel Committee, part of the Bank for International Settlements, is a global standard-setting body made up of 45 central banks and banking supervisors, including U.S. regulators. Any shift by U.S. agencies away from the committee's existing approach could influence how domestic banks assess crypto exposure, capital costs and future market participation.

Our earlier coverage of Senator Elizabeth Warren’s call for stronger financial-sector cybersecurity detailed how she urged the Treasury to tighten supervision as AI-enabled attacks raise operational and systemic risk. The article also noted concerns that federal cybersecurity capacity has been weakened, potentially increasing scrutiny of banks’ internal controls, third-party vendors, and threat-information sharing.

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