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

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

Published Feb 21, 2023 18:09 Updated Feb 21, 2023 19:10

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

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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.

Read the original article on Benzinga

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