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>>Bitcoin and Basel Banking Standards Clash as Strategy CEO Condemns 1,250% Risk Weight Assignment

Bitcoin and Basel Banking Standards Clash as Strategy CEO Condemns 1,250% Risk Weight Assignment

crypthub

about 19 hours ago

Regulatory Challenges for Bitcoin Exposure

Strategy CEO Phong Le highlights that Basel-style capital rules impose a 1,250% risk weight on Bitcoin, making bank engagement prohibitively expensive compared to 0% for gold and cash. He argues that global Basel frameworks shape national bank regulations, influencing whether institutions can adopt digital assets. The US, aiming to lead in crypto, must reevaluate its implementation of these rules to align with broader ambitions.

Capital Requirements and Market Impact

Conner Brown notes that Bitcoin’s 1,250% risk weight requires banks to hold $1 in capital for every $1 of exposure, unlike gold, which incurs minimal costs. He emphasizes Bitcoin’s favorable traits—continuous trading, transparent pricing, and fixed supply—as arguments against its harsh treatment. This disparity discourages banks from offering custody services, pushing activity to offshore jurisdictions with higher risks.

Competitiveness and Policy Recommendations

Brown warns that current regulations undermine US financial institutions’ global competitiveness by diverting business to non-bank entities. He stresses the need for regulatory adjustments to align Bitcoin’s risk pricing with its actual characteristics, ensuring banks can participate fairly in the digital asset ecosystem while maintaining stability.