Wall Street’s biggest trade groups sent a letter to US banking regulators on June 17, asking them to go further in relaxing Basel capital rules. The request comes just three months after regulators proposed cutting capital requirements for large banks by roughly 4.8% to 5%.

What Wall Street actually wants

The letter focuses specifically on the market risk components of the Basel framework. These are the rules that dictate how much capital banks need to set aside to cover potential losses from their trading operations.

Trade bodies estimate that the proposed rules, as currently drafted, could increase capital requirements for trading activities by somewhere between 30% and 89%. That’s a wide range, but even the low end represents a massive jump in how much money banks would need to keep locked up rather than deployed in markets.

The Treasury market is a particular point of anxiety. It’s the bedrock of the global financial system, the place where the US government borrows money and where interest rates get set. Less liquidity there doesn’t just affect banks. It ripples through mortgages, corporate borrowing, and pretty much every corner of finance.

The bigger Basel picture

In March 2026, the Federal Reserve and fellow US regulators unveiled plans to reduce aggregate capital requirements for large banks by approximately 4.8% to 5%. That move was projected to free up billions of dollars, giving banks more room for lending, dividends, and share buybacks.

Why crypto investors should pay attention

The Basel Committee, the international body that sets these standards, is currently revisiting its capital framework for cryptocurrencies. Under current Basel standards, Group 2 crypto assets, a category that includes Bitcoin and Ethereum, carry a 1,250% risk weight. That effectively means banks need to hold $1 of capital for every $1 of crypto exposure. Compare that to something like a corporate bond, which might carry a risk weight of 20% to 100% depending on its rating.

The crypto industry has pushed back hard against this framework, arguing that the risk weights are unworkable and essentially amount to a de facto ban on banks engaging with digital assets. The Basel Committee’s decision to review these standards suggests the criticism has landed.

The trade groups are simultaneously asking for lower capital requirements overall while warning that the specific trading-related rules could tighten significantly. If regulators ease the aggregate requirements but keep the trading components harsh, the net effect on market liquidity could be less positive than the headline numbers suggest.