U.S. Senators Urge Regulators to Ease Strict Crypto Banking Rules

Highlights:

• U.S. senators urged bank regulators to create fair capital rules for digital assets.
• Lawmakers criticized Basel rules that give some crypto assets a 1,250% risk weight.
• Senators said banks need risk-based crypto rules to participate safely in digital asset markets.

A group of U.S. senators has urged federal banking regulators to create clear and fair capital rules for banks that want to hold or work with digital assets. The request came in a letter dated May 27 and was announced by Senator Cynthia Lummis’ office on Thursday. The lawmakers said current global standards make it too difficult for banks to take part in crypto markets in a practical way.

Senate Banking Subcommittee on Digital Assets Chair Cynthia Lummis and Senator Dan Sullivan led the letter. Senators Bill Hagerty, Bernie Moreno, Ted Budd, and Jon Husted also signed it. They sent the letter to Federal Reserve Vice Chair for Supervision Miki Bowman, FDIC Chairman Travis Hill, and Comptroller of the Currency Jonathan Gould.

The senators urged the agencies to follow their recent guidance on tokenized securities. That guidance says regulators should base capital treatment on the risk of the underlying asset, not on the technology used to record ownership. The lawmakers said regulators should apply the same approach to other digital assets.

🚨NEW: A group of pro-crypto senators is pressing U.S. banking regulators to establish capital requirements for banks’ crypto activities.

In a new letter, @SenatorHagerty, @SenDanSullivan, @SenLummis, @berniemoreno, @SenJonHusted and @SenTedBuddNC argue that the Basel… pic.twitter.com/AivZ8XEwDg

— Eleanor Terrett (@EleanorTerrett) June 4, 2026

Senators Push Back Against Basel Crypto Rules

The letter mainly criticized the Basel Committee’s crypto rules for banks. Under these rules, banks must treat some digital assets, including Bitcoin, as very risky assets. The senators said this rule is too strict.

The rule gives some digital assets a 1,250% risk weight. This means banks may need to keep a very large amount of money aside if they hold these assets. The senators said this makes it almost impossible for banks to hold Bitcoin or other digital assets in a normal way.

They argued that regulators did not properly study the real risks of digital assets before applying this rule. In their view, the rule punishes the whole crypto market with one strict standard. They also said it creates a “de facto ban” on banks holding digital assets because the cost becomes too high.

The letter also explained how this affects banks. If a bank has digital asset exposure, it may need to keep capital equal to the full value of that exposure. For example, if the exposure is worth $100, the bank may need to keep $100 in capital.

Because of this, banks may avoid crypto-related services, even when the law allows them. The senators said regulators should look at the real risk of each asset instead of using one harsh rule for all digital assets.

Lawmakers Want a Risk-Based Approach

The senators did not say digital assets are risk-free. They noted that assets such as Bitcoin carry risks, including price volatility and operational complexity. However, they argued that these risks can be measured through existing banking risk tools.

They also said Bitcoin is a transparent and globally traded asset with deep derivatives markets, continuous liquidity, and cryptographic auditability. Because of this, they said regulators should not treat it as an opaque, hard-to-value financial product.

The letter also arrives as Congress is looking to enact larger-scale digital asset market-structure legislation. The senators pointed out that, if banks are permitted to engage in additional digital asset-related activities, there would be a need for more definitive capital guidance for digital asset-related activities from regulators.

The legislators asked the Federal Reserve, the FDIC, and the OCC to begin developing a new capital structure for digital asset activities. They said any new rule should take into account the opportunities and risks of digital assets. They also urged a technology-neutral approach, stating that digital assets markets should be kept safe and meaningful participation for banks should be possible.