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A group of Senate Republicans led by Sen. Cynthia Lummis is pressing the Federal Reserve, the FDIC, and the Office of the Comptroller of the Currency to build a fresh capital framework for digital assets, arguing the Basel Committee's "1,250% risk weight" effectively walls regulated banks out of the market. In a letter sent to Fed Vice Chair of Supervision Michelle Bowman, FDIC Chair Travis Hill, and Acting Comptroller Jonathan Gould, the lawmakers called for capital standards that are "technology-neutral" and that "give banks the authority to participate meaningfully in digital asset markets."
Sens. Dan Sullivan, Bill Hagerty, Bernie Moreno, Ted Budd, and Jon Husted co-signed. The letter lands the same week all three regulators are scheduled to testify before the House Financial Services Committee, and follows a March joint statement from the FDIC, Fed, and OCC clarifying that tokenized securities should receive the same capital treatment as their non-tokenized counterparts — a principle the senators say "should apply consistently" to other digital assets.
Why it matters
The 1,250% risk weight is the single biggest structural barrier to US bank participation in crypto. Under that standard, a bank holding $1 of an unbacked digital asset must reserve roughly $12.50 in capital against it — an effective prohibition. Scrapping or recalibrating the figure would re-open balance-sheet custody, crypto lending, stablecoin reserve management, and tokenized Treasuries to institutions that today can only act through subsidiaries or qualified custodians. It also dovetails with the broader market-structure bill Congress is debating, which the senators note "authorizes banks to engage in a number of on-balance sheet activities with digital assets" — meaning capital guidance has to land in parallel for that authority to be usable.
Market impact
The push reframes a long-running regulatory standoff as a concrete legislative ask rather than a talking point.
Frequently asked questions
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What is the 1,250% risk weight on digital assets?
It's a Basel Committee standard that requires banks to hold roughly $12.50 of capital for every $1 of unbacked digital asset on their balance sheets — a level that effectively prohibits regulated banks from holding such assets directly.
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Who sent the letter to the bank regulators?
Sen. Cynthia Lummis led a group of six Senate Republicans that also included Dan Sullivan, Bill Hagerty, Bernie Moreno, Ted Budd, and Jon Husted.
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Which regulators did the letter target?
It was addressed to Fed Vice Chair of Supervision Michelle Bowman, FDIC Chair Travis Hill, and Acting Comptroller of the Currency Jonathan Gould — all three due to testify before the House Financial Services Committee the same week.
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What does the letter want the regulators to do?
Build a fresh, technology-neutral capital framework for digital assets that lets US banks participate meaningfully in custody, lending, stablecoin reserves, and other on-balance-sheet crypto activity.
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How does this connect to the broader market-structure bill?
The senators note the legislation Congress is debating authorizes banks to engage in on-balance-sheet digital-asset activity — and argue capital guidance has to move in parallel or that authority is effectively unusable.
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