On Feb., 20, the global banking regulatory agency, the Basel Committee on Banking Supervision (BCBS), was asked by executives from Bitcoin treasury firms to review the 1,250% risk weighting on crypto exposures. They stated that the high-risk weighting is making it costly for banks to hold Bitcoin.
The request to revisit the risk-weighting of crypto comes as large corporations are expanding their use of digital assets as a corporate treasury strategy. Hence, financial institutions are increasingly being called upon to provide regulated digital asset services.
Under the current version of Basel III (2019), banks are required to support all of their Bitcoin holdings with a corresponding amount of bank capital. Thereby, classifying crypto as the highest risk category.
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Industry leaders state that the current framework limits the amount of Bitcoin that banks can hold on their balance sheet. This reduces the return on equity for banks that are interested in gaining exposure to digital assets. Conversely, the risk weights of cash, sovereign debt, and physical gold are each zero percent, while the risk weight of private equity is 400%.
A Major Barrier to Banks Adopting Crypto Assets
Strive’s Chief Risk Officer Jeff Walton stated that the policy misprices risk and contradicts an effort to position the U.S. as a global hub for cryptocurrency. He stated that the capital treatment deters regulated institutions from providing custodial, trading, and treasury services related to digital assets.
Strategy’s CEO Phong Le stated that Basel’s capital framework “significantly influences how banks interact with digital assets.” However, he also stated that the framework should be reviewed if the U.S. wishes to be a leader in terms of cryptocurrency adoption. According to the executives, regulated firms are placed at a structural disadvantage when compared to unregulated firms.
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Basel Indicates Willingness to Consider Revisiting Policy
The ongoing debate coincides with the rapidly increasing expansion of corporate Bitcoin treasuries, and as stablecoin market capitalization approaches approximately $300 billion. This increasing on-chain dollar liquidity has put additional pressure on regulators to reform capital regulations so that they align with trends in cryptocurrency adoption.
In 2021, the BCBS first proposed the 1,250% risk weight for crypto assets, and still finalized the proposal in 2024 despite receiving significant opposition from industry players. However, in late 2025, Basel chairman Erik Thedeén indicated that regulators may require a “different approach” to oversee crypto reserves.
Why It Matters
A reduction in the risk weighting of crypto assets by the BCBS could remove one of the largest regulatory obstacles to banks holding Bitcoin and increase the overall liquidity for institutional markets.
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