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Fed Poised to Unveil Basel Risk-Weighting Plan for Big Banks Next Week, With Bitcoin in Focus

Advocates say revisiting Bitcoin’s 1,250% Basel risk weight could determine whether banks expand services tied to the asset.

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Fed’s bowman signals basel iii proposal with 90 day comment period as bitcoin faces 1,250% risk weight
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Overview

  • According to Bitcoin Policy Institute’s Conner Brown, the Federal Reserve is expected to publish a proposal next week detailing how the largest U.S. banks should apply Basel risk-weighting rules.
  • The proposal is slated to open a 90-day public comment period, inviting feedback from banks, industry groups and policy organizations before rules are finalized.
  • Under current Basel guidance, Bitcoin carries a 1,250% risk weight that can require roughly 1:1 capital backing, making it costly for banks to hold or service Bitcoin exposures.
  • The Bitcoin Policy Institute says it will review the proposal and file formal comments, arguing that Bitcoin’s present classification as a high-risk or “toxic” asset is misguided.
  • Industry observers contend the Fed’s approach could shape whether traditional financial institutions broaden or constrain Bitcoin custody and related services, with Fed officials signaling a push to implement the Basel standards in the U.S.