Crypto Finance Leaders Call for Reassessment of Basel III's High Risk Weighting for Digital Assets

Call for Regulatory Reform in Crypto Sector

Leading crypto finance executives are pushing for changes to the Basel III framework, particularly the 1250% risk weighting assigned to Bitcoin and other digital assets. This regulation is seen as overly restrictive, especially when compared to other high-risk sectors like private equity, which carries a 400% risk weight.

Impact of High Risk Weighting

Under the current regulatory system, banks must set aside significant capital to hold crypto assets, which limits their profitability. Chris Perkins, President of CoinFund, highlighted that the high collateral costs discourage banks from entering the crypto space.

• Crypto assets face a 1250% risk weight
• Private equity has a 400% risk weight
• Banks experience reduced return on equity

Potential for Future Growth

Adjustments to Basel III could lead to increased bank participation in the crypto market, fostering greater financial integration within the industry.