Citi UK Official Challenges 1,250% Crypto Risk Weight as Digital Asset Market Expands

Tiina Lee, Citi UK's country head, has criticized the proposed 1,250% risk weight on crypto assets, warning it could deter banks from participating in the burgeoning digital asset sector. Speaking at TheCityUK's London summit, Lee argued that such stringent capital requirements would effectively price regulated institutions out of crypto markets.

The Basel Committee's rule, set to take effect in 2025, WOULD force banks to hold $125 in capital for every $100 of crypto exposure—a prohibitive threshold that could push activity into shadow banking channels. "We risk creating exactly what we're trying to prevent," Lee cautioned, suggesting the regulation might drive crypto transactions into less transparent venues rather than securing them within supervised banking frameworks.

Her intervention comes as institutional crypto adoption accelerates globally, with major banks and asset managers increasingly exploring digital asset custody, trading, and tokenization services. The debate highlights growing tensions between financial regulators' risk aversion and the industry's demand for pragmatic crypto frameworks.