A group of Senate Republicans is pressing US financial regulators to provide clearer capital rules for banks and other firms engaged in crypto activities, arguing that current standards make it difficult for institutions to hold digital assets on balance sheet.
Senator Cynthia Lummis said she led a letter sent on May 27 to Federal Reserve Vice Chair for Supervision Miki Bowman, FDIC Chairman Travis Hill and Comptroller of the Currency Jonathan Gould. The lawmakers praised March guidance that clarified the capital treatment of tokenized securities, but said regulators should go further and establish a fair framework for digital assets held directly by financial institutions.
The senators criticized existing international standards that can require banks to hold capital against crypto exposures at levels far above the value of the assets themselves. In their view, the approach functions as a de facto prohibition on bank participation in digital asset markets rather than a calibrated risk-based standard.
The push comes as senators prepare to take up the CLARITY Act, a broader crypto market structure bill that would define how federal agencies oversee the industry. The current version would allow banks to use digital assets and blockchain technology in areas such as payments, lending, custody and trading. Senate leaders want the measure advanced before the November midterm elections, when the legislative calendar could become far more difficult.
The lawmakers also took aim at the Basel Committee on Bank Supervision’s longstanding 1,250% risk weight for crypto exposures, saying it does not reflect the actual risk profile of digital assets. They argued that any future capital framework should better capture both the risks and the business opportunities tied to crypto, while remaining technology-neutral and allowing banks to participate meaningfully in the market.
The letter said forthcoming crypto legislation in Congress will almost certainly require updated capital guidance and called on regulators to begin developing that framework now. Senators Dan Sullivan, Bill Hagerty, Bernie Moreno, Ted Budd and Jon Husted also signed the letter.
Debate on the Senate’s crypto bill is expected to resume this week after lawmakers returned from recess. The proposal would divide oversight between the Securities and Exchange Commission and the Commodity Futures Trading Commission, but major differences between the Banking and Agriculture Committee versions still need to be reconciled. Stablecoin rules, ethics provisions and restrictions involving crypto developers remain additional hurdles for passage.The US Bureau of Labor Statistics will publish the May nonfarm payrolls report on Friday at 12:30 GMT, giving markets a fresh look at the health of the labor market at a time when attention has shifted increasingly toward inflation risks and Federal Reserve policy.
With policymakers sounding more hawkish under the new Fed chair, investors will focus less on the headline jobs gain alone and more on the details of the report, including the unemployment rate and wage growth. A weak outcome could still pressure the US Dollar, but only a notably poor reading is likely to materially alter expectations for a tighter policy path later this year.
Economists expect employment to rise by 85,000 in May, following gains of 185,000 in March and 115,000 in April. The unemployment rate is projected to remain at 4.3%, while annual wage growth is expected to slow to 3.4% from 3.6% in April. Some analysts are looking for a softer result, with one forecast calling for just 60,000 new jobs, a slight increase in unemployment to 4.4%, and hourly earnings growth of 0.3% on the month.
Recent private-sector and survey data have painted a mixed picture. The ADP report showed private payrolls rising by 122,000 in May, while manufacturing and services employment gauges from the Institute for Supply Management remained in contraction territory despite some improvement in the manufacturing reading.
For the Federal Reserve, the key issue is whether the labor market is still resilient enough to allow policymakers to keep focusing on inflation. Recent comments from several Fed officials have pointed in that direction, with the labor market described as stable and inflation seen as still too persistent. Markets are also pricing in a roughly 60% chance of at least one 25-basis-point rate increase by the end of 2026.
For EUR/USD , the dollar remains supported by risk aversion and concerns that elevated energy prices could keep inflation sticky. A payrolls figure above 50,000 may be enough to preserve that support and keep the currency pair under pressure. Only a sequence of weak labor-market reports, or a meaningful easing in geopolitical tensions that sharply lowers oil prices, would likely shift the broader outlook against the dollar.
Technically, EUR/USD remains biased lower, with resistance clustered near 1.1680 to 1.1700 and support seen around 1.1580, 1.1500, and the 1.1415 to 1.1400 region.
