A group of U.S. Senators is advocating for the establishment of a clearer regulatory framework concerning the treatment of crypto assets by financial institutions. Their focus is on enhancing capital rules to create a fairer environment for banks involved in cryptocurrency activities.
U.S. Senators Push for Defined Crypto Capital Regulations
On Thursday, representatives from the Senate Banking Subcommittee on Digital Assets, led by Chair Cynthia Lummis, along with Senators Dan Sullivan, Bill Hagerty, Bernie Moreno, Ted Budd, and Jon Husted, submitted a letter urging financial regulators to establish “clear and fair” capital rules for banks that engage with crypto assets.
The letter, directed to high-ranking officials including Federal Reserve Vice Chair for Supervision Miki Bowman, FDIC Chairman Travis Hill, and Comptroller of the Currency Jonathan Gould, expressed concerns over the Basel Committee on Bank Supervision’s recent stringent capital standards, which categorized crypto assets in a notably harsh manner.
Currently, crypto assets are assigned a risk weight of 1,250%, which determines the reserve requirements for banks holding such assets. The senators criticized this approach, suggesting that it was not based on a comprehensive assessment of the risk profiles associated with digital assets.
Instead, they argued that this classification serves as a de facto restriction on banks’ ability to engage with this asset class, contradicting recent statements from regulatory agencies emphasizing a technology-neutral perspective.
The lawmakers acknowledged the positive steps taken by regulatory bodies in clarifying how tokenized securities should be treated, indicating that they would receive capital treatment similar to their traditional counterparts. In March, the FDIC, OCC, and Federal Reserve collectively affirmed that capital evaluations should depend on the intrinsic characteristics of the assets rather than the technology used.
“This principle should be uniformly applicable, including for other digital assets,” the letter asserted. Referring to recent advancements in cryptocurrency regulatory frameworks, the senators urged the FDIC, OCC, and Federal Reserve to commence work on a new capital framework that will accommodate crypto activities.
Regulatory Agencies Emphasize Risk-Based Supervision
The senators’ initiative for reform comes at a time when the three regulatory bodies testified before the House Financial Services Committee, discussing ongoing efforts to evaluate and refine regulations established post-2008 financial crisis.
In his prepared remarks, FDIC Chairman Travis Hill highlighted that the agency is transitioning towards a more effective supervisory framework. This approach aims to bolster the safety of banking institutions while promoting broader financial system resilience.
Hill noted that robust capital standards are essential for maintaining a resilient banking system; they also support economic growth and customer investment. Regarding crypto assets, he mentioned ongoing efforts to regulate subsidiaries approved to issue payment stablecoins, as outlined in the GENIUS Act.
Similarly, the OCC Chief confirmed a shift towards risk-based supervision. This approach emphasizes discretion and judgment, rather than rigid compliance checklists, while re-evaluating past supervisory actions and criticisms.
“Our role is to enable responsible innovation,” Gould stated, asserting the importance of maintaining trust in the banking system through equitable access to financial services, regardless of political or personal beliefs. He added that efforts are underway to review activities across major banks and to address concerns related to unauthorized debanking.
