Banks seek to deploy capital in the most efficient way possible, but capital rules under the Basel III framework make crypto holdings costly.
The Basel III rules, which govern bank capital requirements, are set to be updated in 2026, and if Bitcoin (BTC) receives a lower risk rating in the revised rules, it could potentially trigger a “huge” influx of liquidity into BTC, according to market analyst Nic Puckrin.
Under the current Basel rules, BTC and similar digital assets are given a 1,250% risk weight, meaning banks must hold reserve assets at a 1:1 ratio to back any Bitcoin held on their balance sheets, Puckrin said.
These restrictive capital requirements make it “almost impossible” for banks to hold BTC or offer BTC-related services, he added. He said:
