Banks cannot hold Bitcoin on their balance sheets because regulatory capital requirements assign it a 1,250% risk weight, which eliminates their ability to leverage against it and increases their cost of capital for the entire portfolio, forcing banks to avoid holding this $1.4 trillion asset despite its market value.
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Banks Can't Hold Bitcoin LegallyAdded:
is 1,250%.
Basically, the bank gets zero ability to leverage against Bitcoin held on balance sheet.
>> Mhm. So, what do they do? They don't hold it. Yeah. Cuz their their whole business model is like leverage. And like we want to hold capital and we want to leverage against it.
And if they were to hold Bitcoin on the balance sheet, it would increase their cost of capital. For the entire portfolio. So, they they don't hold it.
So, that that's a fascinating perspective, right? It's It's become a Bitcoin has become a $1.4 trillion asset.
And banks can't even hold it as regulatory capital. So, what does that also mean?
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