A group of Senate Republicans is pressing bank regulators to build on recent regulatory progress by creating a clearer capital framework for cryptocurrency and asset processing activities.
US Senators Demand Clear Rules for Crypto Capital
On Thursday, the Senate Banking Subcommittee on Digital Assets was chaired by Cynthia Lummis and Senators Dan Sullivan, Bill Hagerty, Bernie Moreno, Ted Budd, and Jon Husted. subscriber A recent letter urges major financial agencies to move towards “clear and fair” capital rules for banks involved in crypto asset activities.
The letter, addressed to Federal Reserve Deputy Chairman for Supervision Mickey Bowman, Federal Deposit Insurance Corporation (FDIC) Chairman Travis Hill, and Comptroller of the Currency Jonathan Gould, criticized the Basel International Committee on Banking Supervision’s capital standards, which gave “the most punitive rating within the capital framework” to crypto assets.
It is worth noting that the standard allocated a risk weight of 1,250%, which is used to determine the amount that a bank should hold for a specific asset, on crypto assets. For the Senators, “this rating was not derived from a calibrated assessment of the actual risk profile of digital assets.
Instead, “it appears to be a blanket penalty defined by the asset class as a de facto ban on banks holding that class of assets, in direct tension with a technology-neutral approach.” Agencies As the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) revealed over the past year.
Lawmakers praised regulators for their recent interagency guidance on tokenized securities, which clarified the capital treatment of these assets. In March, the Federal Deposit Insurance Corporation (FDIC), the Securities and Exchange Commission (OCC), and the Federal Reserve jointly said that tokenized securities should generally receive the same capital treatment as their non-tokenized counterparts, emphasizing that capital treatment should reflect the risk characteristics of the underlying asset, not the technology used to record ownership.
“This principle should apply consistently, including to other digital assets,” the letter said. Quoting this position and hadith progress Regarding the Cryptocurrency Market Structure Bill, which would expand the ability of banks to engage in on-balance sheet crypto asset activities, the senators urged the FDIC, OCC, and Federal Reserve to begin developing a new capital framework for such activities.
Top regulators are shifting to “risk-based” supervision.
The senators’ call for new rules for crypto capital came as the three regulators testified before the House Financial Services Committee on Thursday morning, updating lawmakers on their broader efforts to reconsider and relax several banking rules implemented after the 2008 financial crisis.
In prepared remarks, Chairman of the Federal Deposit Insurance Corporation (FDIC). male The agency is implementing several changes to reform its approach toward a more “effective and efficient” supervisory framework that continues to support the integrity of individual institutions and the broader system.
Hill stated that strong capital standards play a crucial role in ensuring the resilience of banking services systemwhile driving economic growth and supporting its customers. Regarding crypto assets, he stated that the agency has issued several proposed rules to regulate and supervise affiliates of FDIC-supervised depository institutions (IDIs) approved to issue stablecoins for payment under the GENIUS Act.
Likewise, OCC Chairman Confirm It “returns to risk-based supervision inherent in the law and emphasizes examiner judgment, not arbitrary checklists,” reviewing past supervisory criticisms and enforcement actions.
“Our mission is to facilitate responsible innovation, not discourage it,” Gould said, adding, “Our banking system will remain relevant and reliable only if it resists pressures to deny access to services on the basis of political or religious beliefs or legal business activity. We have made significant progress in reviewing the activities of the nation’s largest banks and are investigating complaints of alleged cancellation of banking services, consistent with the President’s Executive Order.”
The total crypto market capitalization is at $2.18 trillion in the one-week chart. Source: TOTAL on TradingView
Featured image from Unsplash.com, chart from TradingView.com
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