{"id":429813,"date":"2026-06-07T16:01:40","date_gmt":"2026-06-07T10:31:40","guid":{"rendered":"https:\/\/dripp.zone\/news\/a-little-known-1250-rule-could-lock-us-banks-out-of-bitcoin-crypto-news\/"},"modified":"2026-06-07T16:14:52","modified_gmt":"2026-06-07T10:44:52","slug":"a-little-known-1250-rule-could-lock-us-banks-out-of-bitcoin-crypto-news","status":"publish","type":"post","link":"https:\/\/dripp.zone\/news\/a-little-known-1250-rule-could-lock-us-banks-out-of-bitcoin-crypto-news\/","title":{"rendered":"A little-known 1,250% rule could lock US banks out of Bitcoin &#8211; Crypto News"},"content":{"rendered":"<p><\/p>\n<div>\n<p>A group of Republican senators is warning US bank regulators that a little-known capital rule could effectively keep banks out of Bitcoin, even as Congress moves to give traditional financial firms a larger role in digital asset markets.<\/p>\n<p>In a May 27 letter to Federal Reserve Vice Chair for Supervision Michelle Bowman, FDIC Chair Travis Hill, and Comptroller of the Currency Jonathan Gould, six senators urged the agencies to build a new capital framework for on-balance-sheet digital asset activities.<\/p>\n<p>Their target is <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/x.com\/BitcoinConner\/status\/2062526524201337298?s=20\">Basel&#8217;s 1,250% risk weight<\/a> for assets such as Bitcoin, which they argue functions as a de facto ban on banks holding crypto.<\/p>\n<p>A 1,250% risk weight multiplied by the 8% minimum capital requirement equals a 100% capital allocation, meaning a bank holding $100 million in Bitcoin needs at least $100 million in capital against it.<\/p>\n<p>For banks that manage to meet internal CET1 targets above the regulatory floor, the burden climbs further. A bank with a 12% internal capital target would need $150 million in capital for that same $100 million exposure, requiring roughly $18 million in annual net profit to clear a 12% ROE hurdle.<\/p>\n<p>Normal custody, <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/cryptoslate.com\/trading\/\">trading<\/a>, or client-service economics rarely generate returns at that threshold, leaving a bank legally authorized to hold Bitcoin but financially unable to justify doing so.<\/p>\n<figure id=\"attachment_539715\" aria-describedby=\"caption-attachment-539715\" style=\"width: 1052px\" class=\"wp-caption aligncenter\"><noscript><\/noscript><img loading=\"lazy\" decoding=\"async\" class=\"lazyload wp-image-539715 size-full\" src=\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2026\/06\/brave_Yx6JDBvd8A.jpg\" alt=\"How the Basel rule turns Bitcoin into a bigger management issue\" width=\"1052\" height=\"736\" srcset=\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2026\/06\/brave_Yx6JDBvd8A.jpg 1052w, https:\/\/cryptoslate.com\/wp-content\/uploads\/2026\/06\/brave_Yx6JDBvd8A-300x210.jpg 300w, https:\/\/cryptoslate.com\/wp-content\/uploads\/2026\/06\/brave_Yx6JDBvd8A-1024x716.jpg 1024w, https:\/\/cryptoslate.com\/wp-content\/uploads\/2026\/06\/brave_Yx6JDBvd8A-768x537.jpg 768w\" data-sizes=\"(max-width: 1052px) 100vw, 1052px\"\/><figcaption id=\"caption-attachment-539715\" class=\"wp-caption-text\">A bar chart shows Basel&#8217;s 1,250% risk weight forcing $100 million in Bitcoin exposure to require between $100 million and $150 million in capital.<\/figcaption><\/figure>\n<h2>Why this lands now<\/h2>\n<p>The Senate Banking Committee <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/cryptoslate.com\/clarity-act-clears-major-senate-committee-hurdle-advances-to-the-full-senate-floor\/\">advanced the CLARITY Act<\/a> on May 14 by a 15-9 vote, sending it to the Senate floor.<\/p>\n<p>If passed, the bill would give banks a clearer statutory role in digital asset markets, but the senators argue that legislative permission without capital efficiency leaves banks holding a permission slip they cannot afford to use. A bank can be legally authorized to hold <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/cryptoslate.com\/coins\/bitcoin\/\">Bitcoin<\/a> and still be structurally prevented from doing so by a capital charge that makes the position uneconomic before the first trade.<\/p>\n<p>The three regulators the letter addresses have each moved toward crypto permissiveness since early 2025.<\/p>\n<p>The OCC reaffirmed in March 2025 that national banks <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/cryptoslate.com\/occ-gives-green-light-for-banks-to-custody-digital-assets\/\">may engage in crypto custody<\/a>, <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/cryptoslate.com\/stablecoins\/\">stablecoin<\/a>-related activities, and distributed-ledger payment functions, while removing the prior supervisory non-objection requirement.<\/p>\n<p>The FDIC followed that same month, rescinding its notification requirement and allowing FDIC-supervised institutions to <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/cryptoslate.com\/fdic-says-banks-can-engage-in-crypto-activities-without-prior-approval\/\">pursue permissible crypto activities<\/a> without prior approval.<\/p>\n<p>The Fed withdrew its guidance on crypto assets and dollar tokens <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/cryptoslate.com\/federal-reserve-relaxes-crypto-partnership-rules-for-banks\/\">in April 2025<\/a>, framing the move as support for innovation.<\/p>\n<p>All three agencies opened the door to crypto activity and left the Bitcoin capital question untouched.<br \/>The senators found their sharpest argumentative foothold in a March 2026 interagency FAQ on tokenized securities.<\/p>\n<table>\n<thead>\n<tr>\n<th>Regulator<\/th>\n<th>Recent crypto-friendly move<\/th>\n<th>What it allowed or eased<\/th>\n<th>What remains unresolved<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>OCC<\/td>\n<td>March 2025 guidance<\/td>\n<td>Crypto custody, stablecoin activity, DLT payments; removed non-objection requirement<\/td>\n<td>Capital treatment for bank-held Bitcoin<\/td>\n<\/tr>\n<tr>\n<td>FDIC<\/td>\n<td>March 2025 guidance<\/td>\n<td>Permissible crypto activities without prior FDIC approval<\/td>\n<td>Capital treatment for direct crypto exposure<\/td>\n<\/tr>\n<tr>\n<td>Fed<\/td>\n<td>April 2025 withdrawal<\/td>\n<td>Pulled prior crypto\/dollar-token guidance<\/td>\n<td>Capital treatment for on-balance-sheet Bitcoin<\/td>\n<\/tr>\n<tr>\n<td>Fed \/ FDIC \/ OCC<\/td>\n<td>March 2026 FAQ<\/td>\n<td>Tokenized securities generally treated like underlying securities<\/td>\n<td>Whether that logic applies to native cryptoassets<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>The joint guidance from the Fed, FDIC, and OCC held that eligible tokenized securities should generally receive the same capital treatment as their non-tokenized equivalents, and that the <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/cryptoslate.com\/technology\/\">technology<\/a> used to record or transfer ownership should not determine capital allocation.<\/p>\n<p>If a tokenized Treasury is treated like a Treasury because the underlying risk profile governs its treatment, the logic should extend to Bitcoin, and the asset&#8217;s volatility and operational risks are measurable and can support a calibrated framework.<\/p>\n<p>The March 2026 guidance covers eligible tokenized securities, and the senators are pressing <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/cryptoslate.com\/regulation\/\">regulators<\/a> to carry the same technology-neutral logic forward to native digital assets.<\/p>\n<h2>The prudential case for the rule<\/h2>\n<p>The Fed, FDIC, and OCC&#8217;s 2023 joint statement noted <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/cryptoslate.com\/price-watch\/\">price<\/a> volatility, legal uncertainty regarding custody and ownership rights, contagion from <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/cryptoslate.com\/exchanges\/\">exchange<\/a> and counterparty failures, governance weaknesses in crypto networks, and operational risks associated with open or decentralized infrastructure.<\/p>\n<p>The Basel standard was built around those risks after the 2022 crypto collapse exposed how quickly losses could spread to interconnected institutions.<\/p>\n<p>A dollar-for-dollar capital charge reflects a genuine judgment that Bitcoin&#8217;s risk profile does not resemble the assets that populate traditional bank balance sheets.<\/p>\n<div id=\"cs-inline-newsletter-6a2535f5a5690\" class=\"cs-inline-newsletter\" data-inline-newsletter=\"\">\n<div class=\"cs-inline-newsletter__inner\">\n<div class=\"cs-inline-newsletter__content\"> <span class=\"cs-inline-newsletter__eyebrow\">CryptoSlate Daily Brief<\/span><\/p>\n<h3 class=\"cs-inline-newsletter__title\">Daily signals, zero noise.<\/h3>\n<p class=\"cs-inline-newsletter__copy\">Market-moving headlines and context delivered every morning in one tight read.<\/p>\n<p> <span><i class=\"fa-regular fa-bolt\" aria-hidden=\"true\"\/> 5-minute digest<\/span> <span><i class=\"fa-regular fa-star\" aria-hidden=\"true\"\/> 100k+ readers<\/span><\/p>\n<\/div>\n<div class=\"cs-inline-newsletter__form-shell\">\n<p class=\"cs-inline-newsletter__privacy\">Free. 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Welcome aboard.<\/span><\/p>\n<\/div>\n<\/div>\n<\/div>\n<p>The senators argue that the risks of volatility, custody complexity, and operational exposure are quantifiable, and a calibrated capital framework can address them without requiring capital equal to or greater than the exposure itself.<\/p>\n<p>The Basel Committee agreed <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/www.bis.org\/press\/p251119.htm\">in November 2025<\/a> to expedite a targeted review of elements of its cryptoasset standard, and reported progress on that review in February 2026.<\/p>\n<p>Basel Chair Erik Thed\u00e9en <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/www.ft.com\/content\/a02072d6-2444-44e2-99b4-cfd427d90cc0\">has said<\/a> the global crypto rules for banks need to be reworked after the US and UK both declined to implement the current framework.<\/p>\n<p>A coalition of major financial industry groups <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/www.gfma.org\/correspondence\/joint-trades-submit-letter-to-bcbs-calling-for-recalibration-of-cryptoasset-prudential-standards\/\">wrote to Basel in August 2025<\/a>, arguing that the standard would make meaningful bank participation uneconomical and requesting a pause and revisions.<\/p>\n<p>The senators are pressing US regulators to act at a moment when the international architecture underpinning the 1,250% treatment is under open review.<\/p>\n<h2>Two paths from here<\/h2>\n<p>If regulators respond by proposing a calibrated framework for liquid digital assets instead of the blanket Basel weight, the capital required on $100 million of Bitcoin exposure could fall from the current $100 million-$150 million range to something closer to $8 million-$36 million under a 100%-300% risk-weight band and standard capital targets.<\/p>\n<table>\n<thead>\n<tr>\n<th>Scenario<\/th>\n<th>Capital treatment<\/th>\n<th>Bank role in crypto<\/th>\n<th>Likely market effect<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Calibrated framework<\/td>\n<td>100%-300% risk-weight band; $8M-$36M capital on $100M exposure<\/td>\n<td>Banks can hold inventory, support market-making, custody, prime brokerage and structured products<\/td>\n<td>More institutional liquidity; tighter spreads; banks become balance-sheet participants<\/td>\n<\/tr>\n<tr>\n<td>Basel rule remains<\/td>\n<td>1,250% risk weight; $100M-$150M capital on $100M exposure<\/td>\n<td>Banks mostly provide custody, settlement and services, but avoid direct BTC exposure<\/td>\n<td>Bitcoin access remains routed through ETFs, nonbanks and offshore venues<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>At that level, bank <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/cryptoslate.com\/market\/\">market<\/a>-making, custody, prime brokerage, and structured crypto products become viable lines of business. Institutional liquidity improves, spreads compress, and banks move from service providers to balance-sheet participants.<\/p>\n<p>If regulators keep 1,250% treatment as the practical standard for native crypto on-balance-sheet exposure while continuing to open other pathways, banks would continue offering custody and settlement, while direct Bitcoin exposure stays with nonbanks and <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/cryptoslate.com\/etf\/\">ETF<\/a> wrappers.<\/p>\n<p>US-traded spot Bitcoin ETFs already saw roughly $4.4 billion in outflows through May 15 to June 3, showing that institutional access to Bitcoin has routed around bank balance sheets.<\/p>\n<p>That channel will deepen if the capital rule stays intact.<\/p>\n<p>The letter does raise the <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/cryptoslate.com\/politics\/\">political<\/a> cost of inaction while Congress is actively writing the market structure rules that will govern bank participation in digital assets for the next decade, and <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/cryptoslate.com\/legal\/\">legal<\/a> authorization to hold Bitcoin means little if the capital charge required to do so makes the position uneconomic from the first day it hits the balance sheet.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>A group of Republican senators is warning US bank regulators that a little-known capital rule could effectively keep banks out of Bitcoin, even as Congress moves to give traditional financial firms a larger role in digital asset markets. In a May 27 letter to Federal Reserve Vice Chair for Supervision Michelle Bowman, FDIC Chair Travis [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":429814,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[230,225,221,227,226,228,229,60,223,224,222],"class_list":["post-429813","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrency","tag-brave","tag-coinbase","tag-crypto","tag-decentralised","tag-decentralized","tag-decentralized-exchange","tag-erc-20","tag-featured","tag-meme-coin","tag-robinhood","tag-solana"],"_links":{"self":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/429813","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/comments?post=429813"}],"version-history":[{"count":1,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/429813\/revisions"}],"predecessor-version":[{"id":429815,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/429813\/revisions\/429815"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media\/429814"}],"wp:attachment":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media?parent=429813"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/categories?post=429813"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/tags?post=429813"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}