Bitcoin Policy Institute to Assess Federal Reserve Basel Proposal on Bitcoin Risk Rules

• Bitcoin Policy Institute will review the Federal Reserve proposal on bank rules for Bitcoin.
• Current rules treat Bitcoin as high risk, making it hard for banks to hold it.

The Bitcoin Policy Institute said it plans to review an upcoming proposal from the Federal Reserve that could affect how U.S. banks treat Bitcoin under international banking regulations.

Fed Proposal to Public Comment Period

According to policy observers, theFederal Reserve is expected to release a public proposal next week outlining how large U.S. banks should implement the Basel risk-weighting rules. . Once published, it will begin a 90-day public comment period. During this time, banks, industry groups, and policy organizations will be able to review the proposal and submit feedback before the rules are finalized.

Under the current Basel guidelines, Bitcoin is given a 1250% risk weight on bank balance sheets. This means regulators treat the cryptocurrency as a very high-risk asset. Because of this rule, banks must hold much larger reserves if they want to keep Bitcoin on their balance sheets or provide services related to it.

Critics say the current risk weighting discourages banks from interacting with the crypto sector. According to advocates, the rule could limit banking services for Bitcoin firms and custody services for Bitcoin investors, as well as the financial infrastructure supporting the Bitcoin ecosystem. The Bitcoin Policy Institute has indicated it will carefully review the Federal Reserve proposal and submit formal feedback. 

Critics say this requirement makes it difficult for banks to work withBitcoin companies or offer services to crypto users. Industry supporters believe the outcome of the Federal Reserve proposal could shape how much traditional banks participate in the Bitcoin sector in the future.

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