Bitcoin could see stronger institutional adoption if global banking regulators revise capital rules that currently make it costly for banks to hold the digital asset.
Under the Basel III standards, bitcoin carries a 1,250% risk weight, meaning banks must hold capital equal to 125% of the value of their BTC exposure.
Analyst Nic Puckrin said the current framework effectively creates a regulatory barrier that prevents banks from integrating bitcoin into the traditional financial system.
By comparison, government bonds and gold carry a 0% risk weight under Basel rules, while corporate bonds typically range between 20% and 150%.
A reduction in bitcoin’s risk weight could allow banks to hold the asset with lower capital requirements and potentially offer services such as custody, lending and bitcoin-backed financial products.
Industry observers say such a reform could boost market liquidity and encourage institutional investors that have previously avoided the asset due to regulatory constraints.
However, analysts note that bitcoin’s volatility remains a key challenge for banks, which would still need risk management strategies before significantly expanding exposure to the cryptocurrency.
At the time of reporting, Bitcoin price was $73,939.95.