A group of Republican senators in the United States has called on financial regulators to clarify capital requirements for companies and banks involved in cryptocurrency-related activities. Wyoming Senator Cynthia Lummis, a prominent advocate for digital asset regulation, revealed on Thursday that she led a letter sent on May 27 to top US financial authorities, urging for transparent and fair guidance.
Joint appeal to regulators
The letter was addressed to Miki Bowman, Vice Chair for Supervision at the Federal Reserve, Travis Hill, Chairman of the Federal Deposit Insurance Corporation (FDIC), and Jonathan Gould, Acting Comptroller of the Currency. While the senators welcomed the guidance published in March regarding the capital treatment of tokenized securities, they stressed the need for a clearer and more equitable regulatory framework for digital assets held directly on balance sheets.
Cynthia Lummis is well known in the US Senate for her leadership on cryptocurrency and digital asset policy. She has consistently urged for more definitive federal laws and rules to govern the growing digital assets industry.
According to the senators, any capital requirements for digital assets held on balance sheets should accurately reflect the opportunities and risks these assets present. They argue that regulations must enable banks to meaningfully participate in digital asset markets through a technology-neutral approach wherever possible.
Criticism of current standards for banks
The letter also criticized existing international standards governing how banks hold cryptocurrency assets. The senators argued that today’s rules force banks to maintain higher reserves compared to equivalent positions in traditional assets, which they say effectively discourages banks from holding digital assets at all.
In particular, they singled out the long-standing policy of the Basel Committee on Banking Supervision, which assigns a 1,250% risk weight to crypto assets. The senators claim this risk weighting does not reflect a balanced assessment of the actual risk profile of digital assets.
Mini glossary: The Basel Committee on Banking Supervision sets global standards for banking regulation. In this context, risk weighting determines how much capital banks must hold to back specific types of assets on their balance sheets.
Focus on upcoming CLARITY Act discussions
The timing of the letter is notable, as the US Senate is preparing to revisit the “CLARITY Act.” In its current form, the bill would allow banks to leverage digital assets and blockchain infrastructure for activities such as payments, lending, custody, and trading.
Senate leadership hopes to advance the bill before the November midterm elections. Otherwise, the legislation may have to be reintroduced in the next session of Congress. With the Senate returning from recess this week, discussions around the bill are expected to resume shortly.
Sixty-vote threshold for passage stands out
The proposed law also aims to define the jurisdictions of the US Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) over cryptocurrency markets and businesses. The Senate Banking and Agriculture Committees have approved their respective versions of the sections covering securities and commodities, but a compromise must be reached at the full Senate level.
The Senate bill is also expected to address topics such as stablecoins, ethical concerns, and regulations for crypto developers. In order to pass without procedural delays, the bill needs the support of 60 senators. Alongside Lummis, Dan Sullivan, Bill Hagerty, Bernie Moreno, Ted Budd, and Jon Husted also signed the letter.
