This week, Jack Dorsey’s Block applied to federal regulators to create a national trust bank that would provide custody and fiduciary services for Bitcoin. It is the latest sign that Bitcoin is moving rapidly into the mainstream American banking system. There is just one problem: the international rules governing bank capital still treat Bitcoin as financial kryptonite.
Under those rules, a bank must hold ten times as much capital against Bitcoin as against the subprime mortgages that blew up the global economy in 2008. The formula treats Bitcoin, a transparent, verifiable and scarce asset, as more dangerous than the instruments that nearly brought down the banking system. America should write its own rules for Bitcoin.
The Trump administration has made a sport of dismantling international constraints on American economic policy. So far this year alone, the U.S. has severed ties with more than 65 organizations deemed contrary to the national interest. Yet one of the most consequential foreign rulebooks governing U.S. finance remains largely untouched: the Basel Committee’s capital standards for banks.
Even as the Senate advances landmark legislation to make America the global leader in digital assets, Washington still outsources one of the most important decisions about Bitcoin to an unelected committee in Basel, Switzerland. That runs against President Trump’s goals of cutting globalist regulatory overreach and making the United States the “crypto capital of the planet.”
Founded in 1974 to set minimum capital standards for international banks, the Basel Committee grew into something larger. It became the de facto global rule maker for banking, whose frameworks member nations typically adopt wholesale as law.
Basel assigns every asset a “risk weight” that sets how much capital a bank must hold against it. Because capital is expensive, a heavy risk weight all but shuts banks out of an asset. Banks are not required to hold any capital against their holdings of cash or gold. In contrast, subprime mortgages require capital backstops of 4.4% to 12.5% of their value. The required capital holding against Bitcoin is set at 100%, the mathematical maximum the formula allows. This risk category is reserved in theory for the most catastrophically risky assets on earth. The 100% figure is a value judgment dressed up as objective analysis.
Under this regulatory regime, a bank prudently allocating just 5% of its portfolio to Bitcoin may need to triple its total capital reserves. CoinFund president Chris Perkins has described the Basel framework as “a very nuanced way of suppressing activity.
Bitcoin is publicly auditable and capped in supply. To rank it as more dangerous than the instruments that nearly collapsed Western banking is simply prejudice. And the verdict is harder still to defend, because on a bank's balance sheet a modest Bitcoin position can actually reduce risk.
The U.S. Federal Reserve, to its credit, has proposed significant changes that would move U.S. banks away from the most punitive elements of the framework. It’s a welcome sign that domestic regulators may be willing to diverge from Basel’s biased Bitcoin verdict.
Rejecting misguided rules like the capital requirements on Bitcoin are the reason American shareholder capitalism has outperformed its European stakeholder counterpart by an average of 3.74 percentage points each year for over three decades. That gap adds up to trillions in retirement savings and household wealth, and a better quality of life for Americans.
Bitcoin represents the sort of generational wealth-creation opportunity that shareholder capitalism has historically offered, but only if American banks can enter the market without undue burdens. With spot Bitcoin ETFs now trading on U.S. exchanges and institutional adoption accelerating, immediate action is required.
In November 2025, Basel Committee Chair Erik Thedéen conceded the obvious: the digital assets framework may need a “different approach.” That is a striking admission from the body that wrote the rule. Yet the Basel Committee moves at a glacial pace. The review will take years, and reform likely will take even longer. Markets will not wait. Other nations are moving now, and every month the U.S. defers to a Swiss review process erodes our competitive advantage.
America has declared independence from European regulatory authority over and over, ever since 1776. It should do so again and set its own capital rules for Bitcoin. The Federal Reserve has pointed the way. It’s time for Congress and American regulators to finish the job rather than wait years for an unelected committee in Switzerland to hand Bitcoin its permission slip.
