- Senator Cynthia Lummis led a group of Republican senators in sending a letter to US financial regulators on May 27, urging them to establish clear and fair capital standards for digital assets held by banks.
- The letter criticizes the current international standards, which impose a 1,250% risk weight on crypto holdings, as a “de facto ban” that is not based on a calibrated assessment of actual risk.
- The push for regulatory clarity comes as the Senate prepares to debate the CLARITY Act, which would outline how agencies like the SEC and CFTC regulate crypto markets and allow banks to engage in crypto activities.
On May 27, Senator Cynthia Lummis led a group of Senate Republicans in a direct appeal to US bank regulators for clearer capital rules on cryptocurrency. The lawmakers sent a letter to the Federal Reserve, FDIC, and OCC urging them to build on recent guidance for tokenized securities. They specifically called for a new framework for the on-balance-sheet treatment of digital assets.
However, the senators took significant issue with existing international banking standards. They argued that the Basel Committee‘s requirement for banks to hold a 1,250% risk weight against crypto holdings functions as a “de facto ban.” Consequently, the group stated this punitive standard was “not derived from a calibrated assessment of the actual risk profile of digital assets.”
Meanwhile, this regulatory pressure aligns with pending legislative action in Congress. Senate leaders are pushing to pass the comprehensive crypto bill known as the CLARITY Act before the November elections. The current version of this legislation, as noted by Lummis, would permit banks to use digital assets for payments, custody, and trading.
The letter emphasized that any new capital framework should be technology-neutral and accurately reflect risks. Senators Dan Sullivan, Bill Hagerty, Bernie Moreno, Ted Budd, and Jon Husted also signed the document. Debate on the Senate’s crypto bill is slated to resume this week as lawmakers return from recess.
Other critical issues, including stablecoins and ethics provisions, still need resolution for the bill to pass. The legislation requires 60 votes in the Senate to avoid a filibuster that could stall it indefinitely.
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