Six Republican senators have called on U.S. banking regulators to develop new capital standards for digital assets as Congress moves forward with legislation that could expand banks’ involvement in the crypto sector.
Summary
- Senator Cynthia Lummis and five Republican senators have urged U.S. banking regulators to create new capital rules for digital asset activities.
- The lawmakers criticized Basel Committee standards that assign a 1,250% risk weight to certain digital assets, arguing banks need a more balanced framework.
- Senators said pending crypto legislation could expand banks’ digital asset activities, increasing the need for clear capital guidance from regulators.
According to a statement released Thursday, Senator Cynthia Lummis and five other Republican senators sent a letter last week to Federal Reserve Vice Chair for Supervision Michelle Bowman, Federal Deposit Insurance Corporation Chair Travis Hill, and Comptroller of the Currency Jonathan Gould, urging the agencies to provide clearer guidance on how banks should hold capital against digital asset exposures.
The request comes as Bowman, Hill, and Gould are scheduled to testify before the House Financial Services Committee on Thursday.
In their letter, the lawmakers argued that existing international standards developed by the Basel Committee on Bank Supervision assign an excessively high capital charge to digital assets.
The senators pointed to the committee’s 1,250% risk weight for certain crypto holdings, a measure used by banks and regulators to determine how much capital must be set aside against potential losses.
The Basel Committee, which operates under the Bank for International Settlements and includes regulators from the United States and other major jurisdictions, has published several digital asset capital standards in recent years.
Senators Cynthia Lummis, Dan Sullivan, Bill Hagerty, Bernie Moreno, Ted Budd, and Jon Husted signed the letter.
Senators seek technology-neutral treatment
In the letter, the lawmakers said future capital requirements should account for both the risks and opportunities associated with digital assets. They also urged regulators to adopt a technology-neutral approach that would allow banks to participate in digital asset markets without being disadvantaged solely because of the technology used.
Drawing attention to a joint statement issued in March by the Federal Reserve, FDIC, and Office of the Comptroller of the Currency, the senators noted that regulators had already concluded tokenized securities should generally receive the same capital treatment as their traditional counterparts.
According to the letter, the same principle should be applied consistently when regulators evaluate other forms of digital assets.
Lawmakers also linked their request to digital asset legislation currently under consideration in Congress. The senators said pending bills would permit banks to engage in additional on-balance-sheet digital asset activities, creating a need for clear capital rules before those activities become more common within the banking system.
The latest push adds to Senator Lummis’ recent efforts to defend crypto legislation and expand regulatory clarity for the sector. Earlier this week, CNBC reported that Lummis criticized JPMorgan Chase Chief Executive Officer Jamie Dimon over his comments about the CLARITY Act and Coinbase Chief Executive Officer Brian Armstrong.
During a CNBC interview cited by the network, Dimon argued that the legislation failed to address key banking safeguards and anti-money laundering concerns. Lummis rejected that interpretation, telling CNBC that anti-money laundering and Bank Secrecy Act requirements already apply to digital assets and are included in the legislation.
Her latest appeal to federal banking regulators focuses on another issue that lawmakers say will require attention if banks are given a larger role in digital asset markets: how capital requirements should be structured for crypto-related activities held on bank balance sheets.
