The Bitcoin Policy Institute announced it will review a forthcoming proposal from the Federal Reserve concerning how U.S. banks handle Bitcoin under international banking regulations.
The Federal Reserve is expected to release its proposal next week, detailing how large U.S. banks should implement Basel risk-weighting rules. This will initiate a 90-day public comment period for feedback from banks, industry groups, and policy organizations.
Currently, Bitcoin carries a 1250% risk weight on bank balance sheets, classifying it as a high-risk asset. This necessitates significantly larger reserves for banks holding Bitcoin or offering related services.
Critics argue this high weighting discourages bank engagement with the crypto sector, limiting services for Bitcoin firms, investors, and the broader ecosystem. The Bitcoin Policy Institute plans to submit formal feedback on the proposal, which could influence future traditional bank participation in the Bitcoin market.