Senate Republicans push regulators to scrap 1,250% crypto…

A group of Senate Republicans led by Sen. Cynthia Lummis has written to the Federal Reserve, FDIC, and OCC urging them to build a fresh capital framework for digital assets — one that replaces the Basel Committee's punishing 1,250% risk weight that currently makes it prohibitively expensive for banks to hold crypto on their balance sheets.

Why it matters

The 1,250% risk weight is the single biggest structural barrier keeping regulated US banks out of digital asset markets. Under that standard, a bank holding $1 million in Bitcoin must set aside $1.25 million in capital against it — effectively making the position uneconomical. The senators, citing a March joint statement from the FDIC, Fed, and OCC that gave tokenized securities parity with their traditional equivalents, argue the same technology-neutral logic should extend to all digital assets. The letter was sent to Fed Vice Chair Michelle Bowman, FDIC Chair Travis Hill, and Comptroller Jonathan Gould — all three of whom were testifying before the House Financial Services Committee on the same day.

Market impact

The push lands as Congress advances broader digital asset legislation that would formally authorize banks to engage in on-balance-sheet crypto activities. If regulators move toward a risk-weight framework that actually reflects digital asset risk profiles, it would unlock a wave of institutional bank participation — a structural tailwind for BTC and the broader market. The coordinated legislative and regulatory pressure from Lummis, Sullivan, Hagerty, Moreno, Budd, and Husted signals this is a sustained campaign, not a one-off letter.