EU Sets Up Strict Crypto Policy for Banks
- The EU recently delayed its final vote on the MiCA due to issues with translating the rules into the official languages of the union.
- Authorities in Europe have called for clear legislation and laws that guide the use of crypto assets in Europe to provide security for users.
- The European Union have also made huge progress in its move toward a digital euro.
Lawmakers in the European Union (EU) have given the go-ahead to a new policy that will impose strict restrictions on banks that offer crypto transactions. The European Parliament’s Economic and Monetary Affairs Committee voted on Tuesday on a policy requiring banks to keep additional capital as coverage against possible crypto losses.
According to Markus Ferber, a spokesman for the parliament’s largest group, “banks will be required to hold a euro of own capital for every euro they hold in crypto.” Ferber added that “such prohibitive capital requirements will help prevent instability in the crypto world from spilling over into the financial system.”
According to reports, one of the measures proposed by the committee requires banks to report whether or not they are exposed to cryptocurrency. However, the proposed regulations must be approved by the European Parliament and EU finance ministers in order to become law.
The vote seeks to align European regulations with those recommended by the Basel Committee on Banking Supervision last year. The group of supervisory agencies suggested that there should be restrictions on the amount of a bank’s capital that can be exposed to crypto assets, and they laid out recommendations that are expected to be implemented by 2025.
While the new rule seeks to add more security for crypto users, some corners have not taken it too well. The Association for Financial Markets in Europe, a financial lobbying group, believes the amendment’s scope is too broad.
According to the group, “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 vote comes days after the EU announced that it had postponed the final vote on its MiCA legislation due to issues with translating the rule to the recognized languages of the European Union.