Senate Republicans Challenge Basel’s ’De Facto Ban’ on Crypto Banking

Republican senators led by Cynthia Lummis are escalating pressure on federal regulators to reform capital requirements for banks handling digital assets. In a letter to the Fed, FDIC, and OCC, lawmakers criticized the Basel Committee's 1,250% risk weight on crypto exposures as effectively prohibiting regulated institutions from servicing the asset class.

The bipartisan push comes as Congress weighs broader crypto market structure legislation. Senators argue current standards lack nuance, treating all crypto assets as equally risky despite varying underlying technologies. The Basel framework's punitive capital charges could force banks to abandon crypto custody and trading services entirely.

This regulatory clash highlights growing tensions between global standard-setters and US policymakers seeking to foster responsible innovation. The outcome may determine whether traditional finance bridges or further distances itself from digital assets.