EU voted for imposing strict restrictions on banks and seeking to hold cryptocurrency
EU to impose strict restrictions on banks for seeking to hold cryptocurrency and also intended to anticipate the international bank-capital norms. The Economic and Monetary Affairs Committee of the European Parliament EU voted to impose strict restrictions on banks seeking to hold cryptocurrency.
The measures, a leaked version of which was reported by CoinDesk on Monday, are an attempt to anticipate international norms that would limit the number of unbacked assets that lenders hold before the more extensive rules proposed by the European Commission.
Meanwhile, “banks will be required to hold a euro of own capital for every euro they hold in crypto,” according to Markus Ferber, the economic spokesman for the Parliament’s largest political grouping. “Such prohibitive capital requirements will help prevent instability in the crypto world from spilling over into the financial system.
“We’ve seen in recent years that crypto assets are high-risk investments,” he said.
The Association for Financial Markets in Europe, a lobbying group representing traditional finance firms, expressed concern that the amendment’s scope was too broad.
“Because there is no definition of crypto assets in the [legislation], the requirement may apply to tokenized securities as well as the non-traditional crypto assets targeted by the interim treatment,” the organization said in an emailed statement, calling for the issues to be addressed later in the legislative process.
The move by the Parliament’s committee mirrors rules proposed by the Basel Committee on Banking Supervision, the industry’s international standard setter, which has proposed that holdings of unbacked crypto be given the highest possible risk weighting. And it is a limited proportion of a bank’s total issuance of core financial instruments.
To become law, the measures must still be approved by the European Parliament and negotiated with national finance ministers who meet in the Council of the European Union as part of a larger package of bank capital reforms.