🔥 Premium AI-powered Stock Picks from InvestingPro Now up to 50% OffCLAIM SALE

European Union Calls For Fast-Tracking Capital Rules For Banks Holding Cryptocurrencies

Published 21/02/2023, 18:09
© Reuters.  European Union Calls For Fast-Tracking Capital Rules For Banks Holding Cryptocurrencies

Benzinga - The European Union (EU) must expedite the rollout of strict capital rules for banks holding crypto assets in a pending banking law if it wants to meet the deadline set by the Basel Committee, warned the bloc's executive.

What Happened: The committee has imposed a January 2025 deadline for capital requirements for bank exposures to crypto assets, including stablecoins and Bitcoin (CRYPTO: BTC), according to a Reuters report.

While banks have limited involvement in providing crypto asset-related services, the European Commission said they have expressed interest in trading crypto assets on behalf of their clients.

Why It's Important: Delays in enforcing the Basel standards in the EU could lead to banks waiting longer to enter the cryptocurrency market, as separate EU rules for trading crypto assets come into effect in 2024.

"For the time being, banks have very low crypto-asset exposures and only a limited involvement in providing crypto-asset-related services," the European Commission said in an informal discussion paper seen by Reuters.

Also read: Scammers Cash In On ChatGPT's Popularity: Fake Binance, Ethereum Tokens Flooding Market

To enforce the Basel crypto rules, the EU can either propose a new law or expand the banking law it is now finalizing, as called for by the European Parliament.

The Commission paper suggests the EU's European Banking Authority (EBA) could work with the EU's securities watchdog ESMA to ensure that crypto assets are correctly categorized.

The paper further suggests that the EBA, in coordination with ESMA, should maintain a list of how existing crypto assets are categorized.

Basel has set punitive capital charges on unbacked cryptocurrencies like Bitcoin and less conservative charges on stablecoins, which are backed by an asset or fiat currency.

The Commission's aim is to ensure that banks have clarity on their requirements for crypto asset exposures and that risks associated with them are addressed.

By aligning itself with the deadline agreed upon at the Basel level, the EU can meet global regulatory standards for banks holding crypto assets.

Read Next: Dog Fight: Floki And Baby Doge Coin Compete For Meme Coin Crown As 1 Surges 396% In 30 Days

Photo via Shutterstock.

© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Read the original article on Benzinga

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.