The way international banking rules treat cryptocurrencies is increasingly under discussion. Within the Basel Committee on Banking Supervision’s global capital framework, digital assets such as Bitcoin are currently given a risk weight of 1,250%. This means that banks must maintain a very large amount of capital when working with these assets.
With a revision of these rules scheduled for 2026, pressure is growing from the crypto industry and policy organizations to change the current approach. Critics argue that the rules are so strict that banks have virtually no room to offer services around Bitcoin and other digital assets.
According to critics, Bitcoin is treated too strictly by Basel rules
The Bitcoin Policy Institute, an American interest group for Bitcoin, is preparing a response to a new proposal from the US central bank (Federal Reserve). This proposal is about how banks should assess risks of different assets.
According to Conner Brown, director of the Bitcoin Policy Institute, the current rules treat Bitcoin disproportionately.
“Under the Basel rules, Bitcoin is given a risk weight of 1,250%, which is stricter than almost all other types of assets,” says Brown.
According to him, this classification means that banks have little incentive to hold Bitcoin or offer services to companies and users in the sector.
Why banks can hardly hold Bitcoin
The high risk weighting has major consequences for banks. The rules require them to reserve almost as much capital as the total value of their Bitcoin position.
Market analyst Nic Puckrin explains that this equates to a reserve ratio of approximately 1-to-1. This means that a bank must maintain almost a euro of capital for every euro in Bitcoin.
According to Puckrin, this makes Bitcoin financially unattractive for banks.
“If the handling of Bitcoin improves even a little, it could finally allow banks to integrate BTC into the financial system,” he says.
According to analysts, even a small relaxation of the rules could lead to greater capital flows into Bitcoin.
Federal Reserve is working on new capital rules
The discussion comes at a time when the US central bank is working on a new version of the capital rules for banks. This is part of the final phase of Basel III implementation in the United States.
Michelle Bowman, vice chair of the Federal Reserve, indicated on March 12 that the central bank will soon publish a proposal with possible changes to these rules.
The Federal Reserve could vote on the revised proposal as early as the week of March 16, 2026, according to sources familiar with the process. This will be followed by a 90-day public consultation period during which companies and experts can give their opinions.
Crypto industry demands more realistic risk assessment
Meanwhile, calls to revise the rules are growing within the crypto sector. In February, several leaders of crypto treasury firms called on regulators to rethink the risk weighting of digital assets.
According to them, the current rules do not sufficiently take into account Bitcoin’s properties, such as its high liquidity and the absence of counterparty risk.
Brown developed this argument further in an essay titled “Basel’s 1250% Mistake.” In it he states that the current method is fundamentally flawed.
According to him, the combination of the risk weighting and the minimum capital requirements means that banks must effectively maintain capital equal to their full exposure to Bitcoin.
Debate touches on broader role of banks in the crypto market
According to analysts, the discussion ultimately goes beyond just banking rules. Many crypto investors are mainly hoping for three concrete improvements: better Bitcoin services through banks, easier access to banking services for crypto companies and more involvement from major financial institutions in addition to existing ETF products.
According to analysts, the current Basel rules leave banks with little room to fulfill that role.
At the same time, the debate is taking place against a broader backdrop of tensions between the US banking sector and the crypto industry. The discussion about new regulations, including the so-called Clarity Act, has been difficult for some time.
The planned revision of the Basel rules in 2026 could therefore become an important step in how Bitcoin and other digital assets are ultimately integrated into the traditional financial system.
Source: https://newsbit.nl/kritiek-op-bazel-regels-voor-crypto-groeit-richting-herziening-in-2026/
