A group of Senate Republicans led by Sen. Cynthia Lummis is pressing key financial regulatory agencies to clarify capital standards for digital assets.
Regulators should work on a fresh capital framework for digital assets, they said in a letter sent last week to Federal Reserve Vice Chair of Supervision Michelle Bowman, Federal Deposit Insurance Corporation Chair Travis Hill, and Comptroller of the Currency Jonathan Gould. All three are testifying in front of the House Financial Services Committee on Thursday morning.
A statement on the letter was released on Thursday.
The lawmakers criticized standards from the international Basel Committee on Bank Supervision, published over the years, that assigned a "1,250% risk weight" on digital assets. Risk weight is used to figure out how much a bank has to hold against a certain asset, so riskier assets require more capital buffers.
Part of the Bank for International Settlements, the Basel Committee is a global standard-setting body composed of 45 central banks and banking supervisors, including U.S. regulators.
"Any proposed capital treatment of on-balance sheet digital asset activities should accurately reflect the opportunities and risks of digital assets—and be based on, to the extent possible, a technology-neutral approach that gives banks the authority to participate meaningfully in digital asset markets," the lawmakers said in the letter.
Sens. Lummis, Dan Sullivan, Bill Hagerty, Bernie Moreno, Ted Budd, and Jon Husted signed the letter.
The letter also references a joint statement from March from the FDIC, the central bank, and the OCC that clarified that tokenized securities should, in general, have the same treatment in capital as non-tokenized forms of the asset.
"That principle should apply consistently—including to other digital assets," the lawmakers said.
The push comes as Congress considers broader digital asset legislation that would broaden banks' ability to engage in balance-sheet digital asset activities.
"This legislation authorizes banks to engage in a number of on-balance sheet activities with digital assets, which will undoubtedly require capital guidance," the senators said.
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