Will banks be required to back every euro they hold in crypto? The EU is tightening the rules for banks holding cryptocurrency. It could limit the amount of unbacked assets like $BTC and $ETH lenders can hold.
In the meantime, “banks will be required to hold a euro of own capital for every euro they hold in crypto," Markus Ferber, the economic spokesman for the Parliament's largest political grouping, said in a statement. “Such prohibitive capital requirements will help prevent instability in the crypto world from spilling over into the financial system.
“There is no definition of crypto assets in the [legislation], and therefore, the requirement may apply to tokenized securities, as well as the non-traditional crypto assets the interim treatment is targeted at,” the organization said in an emailed statement, calling for the issues to be dealt with later in the legislative process.Basel Committee on Banking Supervision
, the international standard setter for the industry, which has proposed that holdings of unbacked crypto should be given the highest possible risk weighting, and also be limited as a proportion of a bank’s total issuance of core financial instruments. In order to pass into law, the measures still need approval from the European Parliament and also have to be negotiated with national finance ministers who meet in the Council of the European Union as part of a fuller package of bank capital reforms.
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