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EU MPs vote for more restrictive capital requirements for crypto-holding banks

Delbert Williams IIBy No Comments2 Mins Read

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The European Parliament’s Economic and Monetary Committee has voted to take measures requiring banks holding cryptocurrencies to hold punitive amounts of capital.

In a January 24 notice, the European Parliament announced that the Commission had voted overwhelmingly in favor of amending the Capital Requirements Regulation and Capital Requirements Directive applicable to banks holding cryptocurrencies. According to the bill, banks will be required to hold a “risk-weighted exposure amount” of up to 1,250% of their capital based on their exposure to cryptocurrencies.

The legislative body said the changes are in line with those of the Basel Committee on Banking Supervision (BCBS), which is responsible for international banking standards. The group considered releasing consultation papers in 2019, 2021 and 2022 to divide crypto assets into groups and recommend how banks should address potential risks. BCBS reported that as of 2021, banks have over $9 billion in crypto exposure.

“[Members of the European Parliament] We also require banks to disclose specific descriptions of their exposure to crypto assets and crypto services, as well as their risk management policies related to crypto assets,” the legislative body said. The Commission was asked to submit a legislative proposal on a dedicated prudent treatment of exposures to crypto assets by June 2023. ”

Related: ECB Council Members Outline Plans for Digital Euro to European Parliament

The entire European Parliament must vote for the proposed amendment to become law. In October 2022, EU MPs moved forward with the framework of the Market for Crypto-Assets (MiCA), following a European Council vote after approval by the Economic and Monetary Committee. EU member state.