Bitcoiner Group Calls for Re‑Classification of Bitcoin in U.S. Banking Rules
Washington, D.C., March 13 2026 – The Bitcoin Policy Institute (BPI), a research outfit representing the interests of Bitcoin users and companies, announced plans to intensify its lobbying effort with the Federal Reserve after the central bank signaled it will soon publish a proposal on how U.S. banks should apply the Basel Committee’s international asset‑risk‑weighting standards.
What’s at stake?
Under the current interpretation of Basel III, Bitcoin (BTC) is assigned a 1,250 % risk‑weight – the highest that the framework permits. In practice, this forces banks to set aside capital equal to the full market value of any Bitcoin they hold, plus an additional buffer, making the cryptocurrency considerably more expensive to finance than traditional assets such as cash, sovereign bonds or gold, which carry a 0 % risk weight.
The Federal Reserve’s supervisory vice‑chair, Michelle Bowman, indicated that a formal rule set will be issued in the coming weeks, aiming to translate the Basel final phase into U.S. regulation. Bowman framed the move as a step toward “more efficient regulation” and a banking sector better equipped to support economic growth while preserving stability.
BPI’s response
BPI’s managing director, Conner Brown, took to the social platform X on Wednesday to declare that the institute will closely examine the Fed’s draft and submit a public comment. In a recent blog post, Brown characterized the 1,250 % weighting as “the most punitive classification” within the Basel capital framework, arguing that it reflects a “category error” rather than an objective assessment of risk.
“Labeling Bitcoin as a ‘toxic asset’ and imposing a risk weight that dwarfs virtually every other class is unsustainable for banks that wish to serve Bitcoin users and businesses,” Brown wrote.
Brown added that the current treatment would severely limit banks’ willingness to offer services such as custodial accounts, loans, or payment processing for Bitcoin, effectively stifling the ecosystem’s growth.
Regulatory background
The Basel Committee first placed crypto‑related exposures in Group 2, a high‑risk bucket, in 2021, capping those holdings at less than 1 % of a bank’s Group 1 assets. While the Committee’s guidance was intended to curb concentration risk, the U.S. implementation appears to be taking a much harsher stance, particularly for Bitcoin.
Potential implications
| Aspect | Current Basel‑derived treatment | Possible outcome if unchanged |
|---|---|---|
| Bank capital requirements | 1,250 % risk weight (effectively 12.5 × the asset value) | Banks must hold significantly more capital, raising the cost of Bitcoin exposure. |
| Customer access | Limited banking services for Bitcoin‑related firms. | Fewer credit, payment, and custodial options for the Bitcoin community. |
| Market perception | Reinforces the narrative of Bitcoin as a high‑risk, speculative asset. | May deter institutional participation and slow mainstream adoption. |
| Regulatory precedent | Sets a hardline U.S. stance that could influence other jurisdictions. | Could prompt similar treatments abroad, affecting global liquidity. |
Analysts note that a revised risk weight could bring Bitcoin’s regulatory treatment in line with other emerging‑market assets, fostering a more level playing field. However, they caution that any softening of the Basel stance would need to address concerns over volatility, custody security, and anti‑money‑laundering compliance.
Key takeaways
- BPI is preparing a formal comment on the Federal Reserve’s upcoming rule proposal, arguing that the 1,250 % risk weight unfairly penalizes Bitcoin.
- The Fed’s final Basel implementation could cement Bitcoin’s status as the most heavily weighted asset in U.S. banking regulation.
- Higher capital requirements will likely increase the cost of banking services for Bitcoin entities, limiting market access.
- Industry observers watch closely, as the U.S. approach may set a de‑facto global standard for how cryptocurrencies are treated on balance sheets.
As the public comment period approaches, the Bitcoin community and its advocates will have a narrow window to influence a decision that could shape the cryptocurrency’s relationship with the traditional financial system for years to
Source: https://cointelegraph.com/news/bitcoin-toxic-asset-basel-framework-federal-reserve-policy-institute?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
