A coalition of Senate Republicans has pressed key US financial regulators to provide clearer and fairer capital standards for banks dealing with digital assets. They argue that existing rules, especially the high reserve requirements tied to crypto holdings, create effective barriers that hinder banks from engaging meaningfully in crypto markets.
Leading the effort, Senator Cynthia Lummis and colleagues sent a formal letter to regulators, including the Federal Reserve’s Vice Chair for Supervision, the FDIC Chairman, and the Comptroller of the Currency. They praised recent guidance on tokenized securities but urged regulators to expand this progress into a comprehensive framework for capital treatment of on-balance-sheet digital assets. Currently, international standards under the Basel Committee impose a steep risk weight on crypto assets, compelling banks to hold reserves vastly exceeding the value of their crypto holdings, which the senators criticized as a "de facto ban."
The lawmakers emphasized that any new capital requirements should be grounded in a realistic assessment of digital asset risks and opportunities. They advocate for a technology-neutral regulatory approach that empowers banks to participate effectively in the evolving digital asset ecosystem. The letter also encouraged early regulatory action to align with the CLARITY Act, a Senate bill aimed at defining how federal agencies will oversee digital assets. This legislation would permit banks to use blockchain and digital assets for payments, lending, custody, and trading, marking a significant expansion of crypto-friendly financial services.
Other signatories include Senators Dan Sullivan, Bill Hagerty, Bernie Moreno, Ted Budd, and Jon Husted. The CLARITY Act has gained momentum as Senate leaders seek to pass it before the upcoming midterm elections; failure to do so could delay regulatory clarity until the next congressional session. Debate over the bill focuses on harmonizing approaches by the Securities and Exchange Commission and the Commodity Futures Trading Commission, alongside addressing stablecoins, regulatory ethics, and the role of crypto developers. The legislation requires 60 votes to pass the Senate, with ongoing discussions expected during the current Senate session.