- The Basel III banking rules, set for a 2026 update, currently assign Bitcoin a prohibitive 1,250% risk weight.
- If the proposed revisions lower Bitcoin’s risk rating, it could enable a “huge” influx of bank liquidity into the asset.
- Critics argue the existing rules act as a regulatory chokepoint, making it “almost impossible” for banks to hold or service Bitcoin.
A pivotal update to global banking regulations could unlock billions in institutional capital for Bitcoin. Market analyst Nic Puckrin suggests that if the Basel III rules are revised in 2026 to assign Bitcoin a lower risk weight, it may trigger a massive wave of bank adoption.
Currently, Bitcoin carries a 1,250% risk weight, forcing banks to hold a dollar in capital for every dollar of Bitcoin. This restrictive requirement, according to Puckrin, makes it “almost impossible” for banks to hold Bitcoin or offer related services.
Consequently, the U.S. Federal Reserve recently opened a 90-day public comment period on implementing these rules. Puckrin stated, “If BTC’s treatment improves even slightly, it could open the door for banks to finally integrate BTC into the financial system.”
Meanwhile, other asset classes face far lower capital hurdles under the same framework. For instance, according to Strive CRO Jeff Walton, investment-grade corporate bonds have a maximum 75% risk weight.
However, Gold and government bonds are assigned a 0% risk weight. Walton argued this demonstrates that “risk is mispriced” for digital assets.
Chris Perkins of CoinFund described the Basel rules as a subtle but powerful suppression tool. He explained, “It’s a very nuanced way of suppressing activity by making it so expensive for the bank to do those activities.”
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