Rochard Urges US Regulators to Clarify Bitcoin Rules in Basel III

• Pierre Rochard, CEO of The Bitcoin Bond Company, has formally challenged US regulators regarding the absence of Bitcoin in the Basel III capital framework rewrite.
• A formal comment was submitted on March 29 to the Federal Reserve, the FDIC, and the OCC, highlighting legal risks stemming from regulatory ambiguity.
• The current regulatory proposals do not specify whether Bitcoin will be subject to the 1,250% risk weight established by the Basel Committee.

Regulatory Omissions and Legal Risks

In a formal communication to the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC), Pierre Rochard argued that regulators cannot finalize capital rules without explaining the evidence behind their treatment of Bitcoin. The latest proposals, released on March 19, aimed to overhaul the US banking capital framework but notably failed to mention Bitcoin, cryptocurrency, or digital assets even once.

According to Rochard, this silence creates a significant gap in how the largest US banks should handle credit, market, and operational risks associated with BTC. He warned that imposing capital requirements without explicit justification could make the final rules vulnerable to legal challenges.

The Disparity in Digital Asset Guidance

The banking industry currently faces uncertainty over whether US authorities will adopt the Basel Committee's SCO60 framework. This international standard assigns a punitive 1,250% risk weight to unbacked crypto assets like Bitcoin. Rochard pointed out a discrepancy in how different digital assets are being handled:

• On March 5, regulators issued an FAQ clarifying that tokenized securities should be treated similarly to traditional counterparts, following a "technology neutral" approach.
• No such clarity has been provided for Bitcoin holdings, lending, or custody services.

Without clear directives, banks are left to guess how existing capital categories apply to Bitcoin-collateralized lending and derivatives exposure, which complicates the economic viability of these services.

Potential Economic Impact

Rochard emphasized that establishing clear banking rules for Bitcoin could actually benefit the traditional financial system. He suggested that integrating Bitcoin into the regulatory framework would improve bank net interest margins and potentially lead to lower interest rates for borrowers.

Before the recent proposal, some market analysts anticipated that a rewrite might ease capital requirements, thereby unlocking more liquidity for Bitcoin-related activities. However, the current lack of transparency remains a primary hurdle for institutional participation in the digital asset space.