Senators Challenge Basel’s 1,250% Bitcoin Risk Weight as CLARITY Act Moves to Senate Floor

A group of U.S. senators led by Senate Banking Subcommittee on Digital Assets Chair Cynthia Lummis and Senator Dan Sullivan sent a letter to the country’s top banking regulators calling for changes to international capital standards they say unfairly penalize banks that hold Bitcoin and other digital assets. The letter was sent as a separate but related development unfolded on Capitol Hill: the Digital Asset Market Clarity Act was placed on the Senate legislative calendar, positioning the bill for a floor vote after months of bipartisan negotiations.

Six Senators Wrote to the Fed, FDIC, and OCC to Challenge the Basel Committee’s 1,250% Risk Weight on Digital Assets

The letter was addressed to Federal Reserve Vice Chair for Supervision Miki Bowman, FDIC Chairman Travis Hill, and Comptroller of the Currency Jonathan Gould. In addition to Lummis and Sullivan, the signatories include Senators Bill Hagerty, Bernie Moreno, Ted Budd, and Jon Husted. 

The lawmakers directed their criticism at the Basel Committee on Bank Supervision’s 2022 framework, which assigned a 1,250% risk weight to on-balance sheet holdings of digital assets such as Bitcoin, the highest punitive classification available within the capital framework, according to the senators, who wrote:

“The Basel Committee on Bank Supervision published prudential capital standards for the on-balance sheet treatment of digital assets like bitcoin in 2022 and assigned a 1,250% risk weight, the most punitive classification in the capital framework.”  

The senators added that the framework “appears to be a blanket penalty assigned by asset category as a de facto ban on banks holding this asset class.” The senators also argued that digital assets are being treated more harshly than comparable financial products and called on the regulators to adopt a more consistent approach to bank capital requirements for crypto holdings.

CLARITY Act Placed on Senate Legislative Calendar After Bipartisan Committee Support

The senators’ letter arrives as Congress continues work on the Digital Asset Market Clarity Act, a bill that would establish a federal regulatory framework for digital assets, including a defined division of oversight responsibilities between the Securities and Exchange Commission and the Commodity Futures Trading Commission. 

The bill reached a procedural milestone after the Senate placed it on its legislative calendar, a step that clears the way for a floor vote following months of bipartisan committee support. Senator Lummis said in a statement: 

“The Clarity Act doesn’t pick winners. It creates a level field where the best ideas win. That’s how America is supposed to work.”

JPMorgan CEO Jamie Dimon Says CLARITY Act Lacks Stablecoin and Anti-Money Laundering Safeguards

The bill’s advancement has not been without opposition. JPMorgan Chase CEO Jamie Dimon voiced strong criticism during an appearance on Fox Business, arguing that the Clarity Act lacks sufficient safeguards for the broader financial system. 

Dimon said the bill allows cryptocurrency firms to effectively pay interest on deposits without adequate protections, and raised concerns about anti-money laundering requirements and Bank Secrecy Act compliance under the bill as currently drafted.

“It allows cryptocurrency firms to effectively pay interest on deposits, stablecoins, or something like that, without the protection that they should have,” Dimon said. 

He also warned that the bill contains inadequate legal protections for banks. “It has almost no legal protections, so the banks will not accept it that way,” he stated.