# Fix Basel — Full Content for LLMs and Agents > This file is the complete, plain-text version of every meaningful piece of content on https://fixbasel.org. It is intended for retrieval by AI agents, LLM crawlers, and search engines that prefer or require markdown over JavaScript-rendered HTML. --- ## Site Identity - **Name:** Fix Basel - **URL:** https://fixbasel.org - **Owner:** Bitcoin Policy Institute (BPI) — https://btcpolicy.org - **Author of underlying paper:** Conner Brown, Head of Strategy, Bitcoin Policy Institute - **Source paper:** "Basel's 1,250% Mistake: Why Basel's Bitcoin Capital Treatment Is a Category Error — and How to Fix It" (February 2026) - **Source paper URL:** https://www.btcpolicy.org/articles/the-1250-mistake - **Comment deadline:** June 18, 2026 (23:59:59 America/New_York) - **Comment URL:** https://www.federalreserve.gov/apps/forms/proposals/FR-2026-0008-01 - **Federal Register / docket:** Federal Reserve, OCC, and FDIC joint proposal on bank capital treatment of cryptoassets (FR-2026-0008-01) - **Related agencies:** Board of Governors of the Federal Reserve System; Office of the Comptroller of the Currency (OCC); Federal Deposit Insurance Corporation (FDIC); Basel Committee on Banking Supervision (BCBS); Bank for International Settlements (BIS) - **Topic:** Bank capital regulation; bitcoin; prudential standards; SCO60; FRTB; OPE25 - **Language:** English (en-US) --- ## Hero Message **Headline:** Fix Basel's 1,250% Mistake **Subhead:** Bitcoin deserves fair capital treatment. It's time to make your voice heard. **Primary call to action:** Submit Your Comment to the Federal Reserve --- ## Chapter 01 — One Number. One Massive Problem. **1,250%** — the risk weight Basel assigned to bitcoin. It is the harshest penalty in the entire banking framework. --- ## Article: Fix Basel's 1,250% Mistake **Subtitle:** Tell the Fed, OCC, and FDIC: Bitcoin deserves risk-based capital treatment, not a blanket penalty that keeps American banks out of Bitcoin. The Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation are currently accepting public comments on proposed changes to U.S. bank capital rules. This is a critical opportunity for Bitcoin users, bank customers, entrepreneurs, investors, and concerned citizens to explain why Basel's proposed treatment of Bitcoin is wrong. Under the Basel cryptoasset framework, Bitcoin receives a harsh 1,250% risk weight. In practice, that means a bank may be required to hold capital equal to the full value of its Bitcoin exposure before additional buffers. That treatment does not make Bitcoin services safer. It makes them economically impractical for regulated banks to offer. America cannot lead the next generation of financial infrastructure if American banks are effectively blocked from touching the world's largest decentralized digital asset. This site explains the issue, why it matters, and how you can submit a serious public comment to help support pro-bitcoin policy. ### What is Basel? The Basel standards are a non-binding international set of guidelines that recommend how banks should operate. Regulators often rely on these rules to help determine how banks can safely operate and what products and services banks can offer their customers. Basel includes recommendations for "risk-weight" of assets. This is a rating that determines how inherently risky an asset is. When an asset receives a very high risk weight, banks must take greater precautions by holding significantly more capital against it. That raises costs and can make the activity commercially impossible. ### Basel assigns Bitcoin its harshest risk weighting In 2022, Basel put out standards on how banks should risk weight "cryptoassets" generally. They assigned all cryptoassets, including Bitcoin, with the harshest rating possible: a 1,250% risk weighting. This rating is harsher than any other asset and more severe than what is assigned to a broad range of opaque and illiquid credit instruments. #### Basel Risk Weights by Asset Class | Asset | Risk Weight | |---|---| | U.S. Dollar (Cash) | 0% | | Gold | 0% | | U.S. Treasuries | 0% | | Corporate Debt (A) | 50% | | Corporate (Unrated) | 100% | | Speculative Equity | 400% | | **Bitcoin** | **1,250%** | Placing Bitcoin in this category means that for every dollar of Bitcoin on a bank's balance sheet, banks must fully offset that Bitcoin with another dollar in reserve. This treatment makes providing Bitcoin products and services extremely expensive for banks compared to all other asset classes. ### Why this matters A 1,250% risk weight does not merely affect a bank's internal balance sheet. It determines what services regulated banks can realistically provide. If Bitcoin activity is made uneconomic for U.S. banks, banks will be deterred from offering custody, settlement, secured lending, treasury services, payment infrastructure, market-making support, hedging tools, and risk-management services for Bitcoin users and businesses. This pushes Bitcoin activity away from regulated banks and toward less supervised venues, offshore institutions, or fragmented workarounds. That is worse for customers, worse for supervisors, and worse for American leadership. ### Basel does not recognize what makes Bitcoin unique There are plenty of risky instruments in crypto — but Bitcoin is fundamentally different. Bitcoin has no issuer. It has no borrower. It has no management team. It has no coupon, redemption promise, reserve portfolio, or defaulting counterparty. Bitcoin is an issuerless, decentralized, globally traded capital asset with a transparent supply schedule, public settlement history, open-source validation, and continuous market pricing. Its risks are real, but they are not mysterious. They are primarily operational risks that can be measured, supervised, and capitalized directly. ### What regulators should do instead The agencies should reject Basel's blanket 1,250% treatment for Bitcoin. Instead, they should develop a risk-sensitive framework that: 1. Treats Bitcoin price exposure under appropriate market-risk capital rules. 2. Applies operational-risk standards to custody, cybersecurity, key management, access controls, and internal governance. 3. Recognizes hedging and risk mitigation where a bank can demonstrate that exposure has been reduced. 4. Distinguishes Bitcoin from issuer-backed tokens, stablecoins, DeFi instruments, and other cryptoassets with materially different risk profiles. This approach would better protect safety and soundness while allowing Bitcoin-related activity to occur inside regulated, supervised U.S. financial institutions. ### The comment period The good news is that U.S. regulators are actively deciding how to treat Bitcoin under the bank capital framework. For the next month, the Federal Reserve, OCC, and FDIC are accepting public comments on proposed changes to U.S. capital rules. This is your chance to put a serious argument into the public record. The question is whether the United States will adopt a capital framework that measures Bitcoin risk, or one that effectively excludes Bitcoin from regulated banking. Your comment does not need to be long. It should be respectful, specific, and personal. Do not include private financial information, account details, wallet addresses, seed phrases, or anything confidential. **Comments are due June 18, 2026.** ### What to say A strong comment should include four things: 1. Who you are. 2. Why you care. 3. Why Basel's 1,250% recommendation is the wrong approach. 4. What you want the agencies to do instead. Use your own words. A short, personal comment is better than a copied form letter. You do not need to be a lawyer, banker, or policy expert. Regulators accept comments from the public because these rules affect the public. The most effective comments explain, in plain language, why the issue matters and what the agencies should consider before finalizing the rule. ### Pick your angle - **If you are a bank customer:** explain why you would prefer Bitcoin services from a regulated U.S. bank rather than an offshore or less supervised provider. - **If you are a business owner:** explain how access to banking, custody, treasury, payments, settlement, or risk-management services affects your ability to operate in the United States. - **If you are an investor:** explain why regulated custody and financial infrastructure matter for consumer protection, market integrity, and responsible access. - **If you care about American competitiveness:** explain why the United States should not force Bitcoin financial infrastructure to develop elsewhere. - **If you care about safety and soundness:** explain why Bitcoin activity is easier to supervise when it occurs inside regulated banks. --- ## Example Comment (Verbatim) > Subject: Comment on Bank Capital Treatment of Bitcoin > > To the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation: > > I am submitting this comment because I believe U.S. bank capital rules should treat Bitcoin according to its actual risks, not through a blanket penalty that makes regulated bank involvement economically impractical. > > Bitcoin is not risk-free. It has price volatility, custody risk, cybersecurity risk, liquidity risk, and operational risk. Banks that engage with Bitcoin should be required to manage those risks through strong controls, audited custody standards, prudent inventory limits, appropriate supervision, and robust operational safeguards. > > But Bitcoin is fundamentally different from many other cryptoassets. It has no issuer, borrower, management team, coupon, redemption promise, reserve portfolio, or defaulting counterparty. It is not a claim on a company, stablecoin issuer, DeFi protocol, or lending platform. > > Bitcoin is an issuerless, decentralized, globally traded capital asset with a transparent supply schedule, public settlement history, open-source validation, and continuous market pricing. Its risks are real, but they are not opaque. They are primarily market, custody, cybersecurity, operational, liquidity, hedging, and concentration risks. Those risks can be measured, supervised, and capitalized directly. > > The blanket 1,250% risk weight proposed by Basel is therefore the wrong tool for Bitcoin's actual risk profile. Regulation that lumps Bitcoin together with speculative instruments and opaque credit products fails to distinguish among different assets, different structures, and different risks. > > At an 8% minimum capital ratio, a 1,250% risk weight can require capital equal to the full value of a bank's Bitcoin exposure before additional buffers. That treatment does not make banks safer. It prevents regulated banks from offering custody, settlement, secured lending, treasury services, payment infrastructure, market-making support, hedging tools, and client services that Bitcoin users and businesses increasingly need. > > I respectfully urge the agencies not to adopt or entrench Basel's blanket 1,250% treatment for Bitcoin. Instead, the agencies should adopt their own risk-sensitive framework that addresses Bitcoin's actual risks through market-risk capital, operational-risk treatment for custody and key management, cybersecurity standards, recognition of hedging, audited custody controls, prudent inventory limits, and graduated concentration limits. > > The agencies should also distinguish Bitcoin from issuer-backed tokens, stablecoins, DeFi instruments, and other cryptoassets with materially different risk profiles. Bitcoin should not receive special treatment. It should receive accurate treatment. > > A risk-sensitive framework would better protect safety and soundness while allowing Bitcoin-related activity to occur inside regulated, supervised U.S. financial institutions. A blanket penalty would push activity away from regulated banks, reduce consumer choice, and weaken American leadership in Bitcoin and financial technology. > > America cannot lead the next generation of financial infrastructure if American banks are effectively blocked from participating in Bitcoin. --- ## Submission Checklist Before submitting: 1. Be respectful. 2. Be specific. 3. Use your own words. 4. Do not include private financial information, account details, wallet addresses, seed phrases, or anything confidential. 5. Submit before **June 18, 2026 (23:59:59 America/New_York)**. 6. Use the official Federal Reserve form: https://www.federalreserve.gov/apps/forms/proposals/FR-2026-0008-01 --- ## Background — From the Underlying Paper "Basel's 1,250% Mistake" The following is an extended summary of the BPI paper that motivates this site. It is provided for AI agents and researchers seeking deeper context. ### Executive Summary The Basel Committee's prudential standard for cryptoasset exposures (SCO60) assigns bitcoin a 1,250% risk weight under Group 2b — the most punitive classification in the entire capital framework. The paper argues this is a category error: a tool designed for opaque, unrateable securitization tranches is being applied to a transparent, globally traded, zero-counterparty-risk asset whose actual risks (volatility, liquidity, operational) are measurable, hedgeable, and already addressable through existing Basel frameworks. A 1,250% risk weight multiplied by the 8% minimum capital ratio produces a dollar-for-dollar capital requirement. A bank holding $100M in bitcoin must allocate $100M or more in capital against a position that generates no yield — functionally equivalent to a capital deduction and effectively eliminating the business case for regulated-bank bitcoin intermediation. ### How Risk Weighting Works Under Basel's standardized approach, each asset class receives a risk weight. The exposure amount × risk weight = Risk-Weighted Assets (RWA). Banks must hold minimum capital as a percentage of RWA (8% base), plus additional buffers (capital conservation, countercyclical, systemic surcharges). Key risk weight comparisons: | Asset Class | Risk Weight | |---|---| | AAA Sovereign | 0% | | Gold (allocated, bullion-backed) | 0% | | AA-rated Corporates | 20% | | A-rated Corporates | 50% | | BB / Unrated Corporates | 100% | | All Other Equity | 250% | | Speculative Unlisted Equity | 400% | | **Bitcoin (Group 2b)** | **1,250%** | Gold's 0% weight establishes a key precedent: where an asset carries zero counterparty credit risk, the framework reflects that structural characteristic rather than defaulting to a penalty weight. Bitcoin, the paper argues, shares this zero-counterparty-risk property. Basel also imposes aggregate Group 2 exposure caps — a soft limit at 1% of Tier 1 capital and a hard cap at 2% — creating a cliff effect that makes banks maintain wide buffers well below the threshold. ### Why the 1,250% Weight Is the Wrong Tool The paper identifies five risk dimensions and argues each is already addressed by existing Basel frameworks: 1. **Volatility.** Bitcoin's annualized volatility ranges between 45–75%, compared to ~15% for gold and ~10% for equities. The FRTB (Fundamental Review of the Trading Book) framework was built specifically to calibrate capital to an asset's actual volatility profile using Expected Shortfall, stress testing, and residual risk add-ons. A blanket 1,250% weight treats measurable volatility as if it were unquantifiable. 2. **Liquidity.** Bitcoin's liquidity profile compares favorably to many assets with more permissive capital treatment: $10–20B in average daily spot volume, CME crypto derivatives averaging 340,000+ contracts/day ($14.1B notional), and trading across ~200 exchanges 24/7/365. No equity, bond, or commodity market offers comparable continuous liquidity access. 3. **Settlement.** Bitcoin settles on-chain in approximately one hour (six confirmations), with the Lightning Network providing near-instant settlement exceeding $1B in monthly volume. This compares favorably to T+1 for U.S. equities and T+2 for gold (LBMA). 4. **Transparency & Auditability.** Every bitcoin transaction is recorded on a public, immutable ledger. Holdings are cryptographically verifiable in real time. Supply is algorithmically fixed and publicly auditable — structurally superior to gold's reliance on estimated mining reports, costly periodic physical audits, and opaque OTC markets. 5. **Operational Risk.** Key management, custody, and cybersecurity are genuine concerns, but operational risk has its own dedicated Basel framework (OPE25). The 1,250% weight double-counts operational risk by embedding it in a credit-risk penalty alongside volatility, liquidity, and every other risk channel. ### Real Economy Consequences - **Corporate treasuries locked out:** 153+ companies hold over 1.1M BTC (~$78B). They need custody, lending, treasury management, and hedging services that the 1,250% weight makes uneconomic for banks to provide — pushing activity toward less regulated channels (as seen with the FTX collapse). - **Individuals and SMBs harmed:** Consumers are pushed toward unregulated crypto platforms with weaker protections, reduced AML/KYC oversight, and higher fraud risk. - **U.S. competitiveness diminished:** The EU (MiCA), Hong Kong, Singapore, and Switzerland have all established clearer regulatory frameworks. If U.S. banks can't competitively offer bitcoin services, activity migrates abroad or into unregulated channels. ### Three-Tier Reform Agenda **Tier 1 — Immediate (Domestic Supervisory Action):** - Custody carve-out: Clarify that pure agency custody (no principal risk) stays off-balance-sheet and is capitalized solely under the operational risk framework, consistent with post-SAB 122 accounting. - Supervised intermediation pathway: Provide a clear path for limited bitcoin intermediation with inventory limits, position reporting, and audited custody standards. **Tier 2 — Medium-Term (Basel Engagement):** - Replace 1,250% with FRTB-based capital: Define a "non-issuer digital commodity" bucket with capital determined under the FRTB Standardised Approach, plus operational-risk add-ons and stress-testing overlays. - Graduated exposure limits: Replace the binary 2% hard-cap cliff with a graduated schedule. - Hedging recognition: Recognize offsetting positions using CME futures, options, and other instruments. - Custody carve-out at Basel level: Codify that pure agency custody should be capitalized via operational risk. **Tier 3 — Long-Term (Principles-Based Classification):** - Classify by risk, not technology: Create a "non-issuer digital commodity" category. - Calibrate capital to measurable dimensions: Use existing Basel frameworks (FRTB for volatility, LCR/NSFR for liquidity, OPE25 for operational risk, graduated limits for concentration). - Establish precedent for future digital assets: Build a durable, principles-based framework. ### Conclusion The Basel Committee's November 2025 decision to expedite a targeted review of its cryptoasset standard signals openness to change. The paper argues U.S. regulators should lead this revision rather than import a flawed standard, and that the proposed reforms simply ask that bitcoin be evaluated by the same risk-sensitive principles governing every other asset in the Basel framework. --- ## Frequently Asked Questions **Q: What is Basel?** A: A set of non-binding international banking standards published by the Basel Committee on Banking Supervision (BCBS) at the Bank for International Settlements (BIS). U.S. regulators (Fed, OCC, FDIC) often adopt or adapt these rules domestically. **Q: What is a "risk weight"?** A: A multiplier that determines how much capital a bank must hold against an asset. A 100% weight means standard treatment; 0% means no capital is required (e.g., U.S. Treasuries, gold); 1,250% is the maximum and effectively requires a bank to hold capital equal to the full value of the position. **Q: Why 1,250%?** A: At an 8% minimum capital ratio, 1,250% × 8% = 100%. Basel uses 1,250% as a mathematical shortcut for "fully capital-deductive" — i.e., dollar-for-dollar capital backing. **Q: Is this rule already in effect?** A: U.S. regulators have not finalized adoption. The Fed, OCC, and FDIC are currently accepting public comment on the proposed treatment. Comments close June 18, 2026. **Q: Who is behind this site?** A: The Bitcoin Policy Institute (BPI), a nonpartisan research organization focused on bitcoin policy in the United States. The underlying paper is authored by Conner Brown, BPI's Head of Strategy. **Q: How long should my comment be?** A: A short, personal comment is more effective than a long form letter. A few paragraphs that say who you are, why you care, why the 1,250% weight is wrong, and what you want regulators to do instead is sufficient. **Q: Will my comment be public?** A: Yes. Public comments become part of the official rulemaking record. Anyone — including future employers — can see them. Do not include sensitive personal or financial information. **Q: Can I copy-paste the example comment?** A: You can, but personal language is more effective. Regulators discount form letters. Use the example as a starting point and rewrite in your own words. **Q: Where do I submit?** A: At the Federal Reserve's official comment form: https://www.federalreserve.gov/apps/forms/proposals/FR-2026-0008-01 **Q: What if the deadline has passed?** A: After June 18, 2026, the comment period closes. The site shows a live countdown. If the period has closed, you can still contact your representatives or amplify the issue publicly, but the formal record will be closed. --- ## Stakeholders Mentioned - Board of Governors of the Federal Reserve System - Office of the Comptroller of the Currency (OCC) - Federal Deposit Insurance Corporation (FDIC) - Basel Committee on Banking Supervision (BCBS) - Bank for International Settlements (BIS) - Bitcoin Policy Institute (BPI) - Conner Brown (author, BPI Head of Strategy) ## Glossary - **BCBS:** Basel Committee on Banking Supervision. - **BIS:** Bank for International Settlements. - **SCO60:** Basel's prudential standard for cryptoasset exposures. - **FRTB:** Fundamental Review of the Trading Book — Basel's framework for market-risk capital. - **OPE25:** Basel's operational-risk capital framework. - **LCR:** Liquidity Coverage Ratio. - **NSFR:** Net Stable Funding Ratio. - **RWA:** Risk-Weighted Assets. - **SAB 122:** SEC Staff Accounting Bulletin 122 (post-SAB 121 guidance affecting bank custody of digital assets). - **Group 2b (Basel cryptoasset framework):** the most punitive classification, including bitcoin. - **Tier 1 capital:** highest-quality bank capital (common equity, retained earnings). --- ## License & Reuse The content of this site, including this file, may be quoted for journalistic, academic, advocacy, or AI-grounding purposes. Attribution to "Bitcoin Policy Institute / fixbasel.org" is appreciated. The example comment is provided as a starting point and is intentionally free for reuse and adaptation. --- *Last updated: 2026-05-07. The countdown on the live site is the source of truth for time remaining.*