US Senators Press Bank Regulators For ‘Fair’ Crypto Capital Rules

A group of Senate Republicans is pressing bank regulators to build on recent regulatory progress by creating a clearer capital framework for crypto activities and asset treatment.

The letter, addressed to Federal Reserve Vice Chair for Supervision Miki Bowman, Federal Deposit Insurance Corporation (FDIC) Chairman Travis Hill, and Comptroller of the Currency Jonathan Gould, criticized the international Basel Committee on Bank Supervision’s capital standards, which gave “the most punitive classification in the capital framework” to crypto assets.

Notably, the standard assigned a 1,250% risk weight, used to determine how much a bank must hold against a certain asset, on crypto assets. To the senators, “This classification was not derived from a calibrated assessment of the actual risk profile of digital assets.

The lawmakers applauded the regulatory agencies for their recent interagency guidance on tokenized securities, which clarified the capital treatment of these assets. In March, the FDIC, the OCC, and the Federal Reserve jointly said that tokenized securities should generally receive the same capital treatment as their non-tokenized counterparts, affirming that capital treatment should reflect the risk characteristics of the underlying asset, not the technology used to record ownership.

The senators’ call for new crypto capital rules came as the three regulators testified before the House Financial Services Committee on Thursday morning, updating lawmakers on their broader effort to revisit and ease several bank rules implemented after the 2008 financial crisis.

“Our job is to facilitate, not stymie, responsible innovation,” Gould said, adding that “Our banking system will only remain relevant and trusted if it resists pressures to deny access based on political or religious beliefs or lawful business activity. We have made considerable progress in reviewing the activities of the largest national banks and are investigating complaints of alleged debanking, consistent with the President’s executive order.”