Senate Republicans Push Regulators for Fair Crypto Capital Rules

TLDR

• Senate Republicans push regulators for fair digital asset capital rules
• Lummis leads GOP call for clearer crypto bank capital standards
• Senators challenge Basel’s harsh 1,250% crypto risk weight rule
• GOP lawmakers seek technology-neutral rules for digital assets
• Crypto bank rules face fresh pressure from Senate Republicans

Senate Republicans have urged federal banking regulators to create fair capital rules for digital asset activities. The lawmakers say current standards limit banks through harsh capital treatment. Their push adds pressure as Congress reviews broader crypto market legislation.

Senators Challenge Basel Crypto Risk Standards

Senator Cynthia Lummis led five Republican colleagues in a letter to senior U.S. financial regulators. The letter went to Federal Reserve Vice Chair for Supervision Michelle Bowman, FDIC Chair Travis Hill, and Comptroller Jonathan Gould. The agencies now face calls to review capital standards for digital asset exposure.

The senators criticized Basel Committee rules that assign a 1,250% risk weight to some crypto assets. They said the standard treats the asset class as too risky without proper calibration. They argued that the framework works like a bank ban.

The Basel Committee sets global banking standards for capital and supervision. Its members include central banks and supervisors from major economies, including the United States. However, the senators said U.S. regulators should apply a technology-neutral approach.

Lawmakers Seek Clear Digital Asset Guidance

The letter asks regulators to build on recent guidance for tokenized securities. In March, the Fed, FDIC, and OCC said tokenized securities generally receive the same capital treatment as traditional securities. The senators said regulators should apply that principle across other digital asset activities.

The lawmakers argued that banks need clear rules before they expand on-balance sheet crypto services. They said banks should hold enough capital for real risks, not blanket penalties. Besides, they said fair standards would support lawful participation in digital asset markets.

The letter comes as Congress studies wider crypto legislation. That legislation could allow banks to conduct more balance-sheet activities with crypto assets. Hence, the senators said agencies must prepare capital guidance before banks receive broader authority.

Congress Pushes for Market Access

The letter carries support from Senators Dan Sullivan, Bill Hagerty, Bernie Moreno, Ted Budd, and Jon Husted. Their message places digital asset capital rules inside a wider policy debate. It also reflects growing Republican pressure on regulators to ease bank participation.

The senators said capital rules should reflect both risks and opportunities. They also said rules should not block banks from offering regulated crypto services. They argued that outdated standards could push activity outside supervised banking channels.

The dispute now moves into a broader regulatory setting. Bowman, Hill, and Gould are appearing before the House Financial Services Committee on Thursday. Their testimony may shape how agencies handle digital asset capital treatment in coming months.

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