EBA Proposes Stricter Capital Requirements for Banks Holding Cryptocurrencies
- The European Banking Authority (EBA) has finalized draft rules requiring banks to hold a risk weight of up to 1,250% for unbacked cryptocurrencies like Bitcoin and Ether.
- The framework will apply to EU-based banks with crypto assets on their balance sheets, impacting institutions such as Italian bank Intesa Sanpaolo, which would need to hold €12.5 million in capital against a €1 million Bitcoin purchase.
- If approved, the rules could come into effect within 20 days of publication in the Official Journal of the EU.
- The EBA’s approach contrasts with global trends, as regulators in the US and Switzerland are moving towards more accommodating frameworks for crypto activities.
- The draft also introduces strict separation between different crypto assets, preventing offsetting between Bitcoin and Ether holdings.
These proposed regulations aim to standardize capital requirements across the EU for financial institutions dealing with cryptocurrencies, potentially limiting their participation in the growing digital asset market.
Under these new rules, banks holding unbacked cryptocurrencies may face significant capital requirements that could impact their investment strategies and market engagement.(Source)
