The Fed is readying to punish banks for holding Bitcoin as US crypto tensions boil over

The Federal Reserve is preparing to vote on a revised Basel capital proposal, which could significantly impact how large banks treat Bitcoin, potentially punishing them for holding it. This rulemaking is crucial because, while regulators have recently clarified legal permissions for crypto activities, the capital rules determine the economic viability of scaling bank involvement beyond ETFs. The current Basel framework categorizes cryptoassets into Group 2b (punitive 1250% risk weight) unless banks meet narrow Group 2a hedging criteria (100% risk weight). For large banks, exposure thresholds (1% and 2% of Tier 1 capital) currently limit meaningful balance sheet integration. If the Fed adopts a harsh implementation, banks will lack incentive for principal market-making or financing, keeping Bitcoin on the edge of the regulated system. Conversely, a more workable path could lead to greater bank custody and infrastructure support for Bitcoin, making it more bankable.

(Source：CryptoSlate)