The Basel Committee on Banking Supervision (BCBS), a global banking regulatory body, is facing mounting pressure from cryptocurrency executives to revise its stringent 1,250% risk weight for Bitcoin (BTC) and other cryptocurrencies under the Basel III framework. This exorbitant capital requirement forces banks to back any BTC on their balance sheets with an equal amount of approved collateral, making it significantly more costly than holding other asset classes.
For context, cash, physical gold, and government debt all carry a 0% risk weight under Basel III. This stark disparity means that banks are heavily discouraged from holding Bitcoin and other digital assets, which can negatively impact their return on equity—a crucial metric for bank profitability.
A Call for Regulatory Reform
Jeff Walton, chief risk officer at Bitcoin treasury company Strive, highlighted the issue on social media, stating, “If the US wants to be the ‘crypto capital’ of the world, the banking regulations need to change. Risk is mispriced.” The sentiment is echoed by Chris Perkins, president of investment company CoinFund, who argues that the current capital rules under Basel III are a significant barrier to crypto adoption by traditional financial institutions.
Phong Le, CEO of Strategy, the largest Bitcoin treasury company, has also joined the chorus of voices calling for reform. “The current rules represent a different type of chokepoint, one that subtly suppresses activity by making it prohibitively expensive for banks to engage in crypto-related activities,” Perkins explained in an interview with Cointelegraph.
Industry Backlash and Potential Changes
The Basel Committee proposed the current risk weightings in 2021, placing BTC and other cryptocurrencies in the highest risk category and imposing a 1,250% risk weight on digital assets. However, the 2024 finalization of these requirements drew heavy criticism from the crypto industry, leading to a growing backlash.
In October 2025, reports emerged that the committee was considering easing the capital requirements for digital assets, particularly in light of the surge in the stablecoin market cap, which is nearing $300 billion, according to data from RWA.xyz. The following month, Erik Thedéen, chair of the BCBS, acknowledged that the international banking regulator may need a “different approach” to the 1,250% risk weight for cryptocurrencies, signaling a potential shift in collateral requirements.
Looking Ahead
The push for regulatory reform is not just about easing the financial burden on banks but also about fostering innovation and integration between traditional finance and the crypto ecosystem. As the crypto industry continues to mature and gain mainstream acceptance, the need for more balanced and nuanced regulations becomes increasingly apparent.
While the Basel Committee’s decision to reassess the risk weight for cryptocurrencies is a positive step, the broader implications for the global financial landscape remain to be seen. The coming months will be crucial in determining whether the regulatory environment will adapt to support the growing convergence of traditional and decentralized finance.
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