The Bitcoin Policy Institute (BPI) has announced intentions to urge the US Federal Reserve to reconsider its treatment of Bitcoin as it prepares to release guidelines on banks’ risk assessments.

BPI’s Managing Director, Conner Brown, shared on X that the organization will closely evaluate the forthcoming proposal and provide commentary to ensure accurate regulation for Bitcoin in the US.

“BPI will be reviewing this proposal closely and submitting a public comment to ensure that US regulators get Bitcoin’s treatment right.”
Brown’s posts come just after the Federal Reserve’s announcement to seek public input on regulations related to asset risk weighting.

Brown criticized the current Basel Committee’s classification of Bitcoin as a “toxic asset,” noting that it carries an exorbitant risk weighting of 1,250%, which he believes is disproportionately harsh compared to most other financial assets.

Aiming for More Efficient Regulation

Michelle Bowman, the Vice Chair for Supervision at the Federal Reserve, stated that new rules aimed at better regulation would be proposed soon.

“The aim is more efficient regulation and banks that are better positioned to support economic growth, while preserving safety and soundness.”_

Under the Basel framework, capital requirements mean banks must back Bitcoin with one-for-one collateral, rendering its maintenance significantly costlier.

Brown describes Bitcoin’s classification as exceptionally punitive and an error in categorization, making it challenging for financial institutions to engage with Bitcoin users and companies.

For further details, check the relevant articles and proposals linked throughout this documentation.