A 1250% risk weight is basically blocking banks from entering; this is not prudent regulation, it's clearly a de facto ban.

CoinDesk? news: six U.S. Republican senators sent a letter to the Federal Reserve, the FDIC, and the OCC, urging regulators to rewrite the capital rules for banks holding digital assets. The senators said that the Basel framework’s 1250% risk weighting for crypto assets such as Bitcoin could, in practice, be a restriction under the 8% minimum capital requirement. That means if a bank has a $100 million Bitcoin exposure, it would need to allocate at least $100 million in capital. Although U.S. regulators have eased some access requirements related to crypto custody, stablecoins, and DLT payments, the capital treatment for banks holding Bitcoin directly has still not been resolved.