The European Union (EU) reached a political agreement on new bank capital legislation today after member state lawmakers sought prohibitive rules to keep crypto out of the traditional financial system.
EU Agrees on Crypto Bank Capital Rules
Legislators have previously opted for prohibitive capital requirements to keep unsupported crypto assets out of the banking system.
The deal was announced in a tweet from the European Parliament's Economic and Monetary Affairs committee, following a meeting between representatives of the European Parliament, national governments and the European Commission, which first proposed the new rules in 2021.
On Tuesday 27/06 @EP_Economics negotiators struck a deal
on changes to Capital Requirements Regulation & Directive #CRR & #CRD @jonasfernandez w/ #EU2023SE details will follow pic.twitter.com/7eRCgk7Eg5— ECON Committee Press (@EP_Economics) June 27, 2023
The political agreement, which brings comprehensive and controversial changes in the way banks evaluate the risk of corporate and housing loans, needs to be voted by member states and legislators in the European Council, which seems like a process that may take months in practice.
International standard setters in the Basel Committee on Banking Supervision are currently finalizing what a global crypto banking rulebook would look like.
However, the details that have already emerged suggest that they will follow a hard line by assigning a maximum possible risk weight of 1,250% to free-floating cryptocurrencies.
This means banks have to put in one euro for every euro they hold in Bitcoin (BTC) or Ethereum (ETH), which gives them little incentive to enter the market.
EU parliamentarians seem eager for these measures to come into force as soon as possible.
This strict stance will be softened somewhat for regulated stablecoins, according to a compromise specifically proposed by the European Commission at the end of the talks.
*Not investment advice.
