• The European Parliament’s economic and monetary affairs committee has voted on policies for banks holding digital assets such as Bitcoin and Ethereum.
• The bill proposal states that banks with crypto holdings must hold up to 1,250 percent of the amount they hold in crypto assets.
• The BCBS recommended categorizing crypto assets based on consultation papers released in the last three years.
On Tuesday 24/01, the European Parliament’s economic and monetary affairs committee voted on policies for banks holding digital assets such as Bitcoin and Ethereum. The bill proposal states that banks with crypto holdings must hold up to 1,250 percent of the amount they hold in crypto assets, in order to comply with the measures put forth by the Basel Committee On Banking Supervision (BCBS).
In a statement regarding the new development, a spokesperson for the Association for Financial Markets in Europe (AFME), Caroline Liesegang, said the Parliament, Commission, and Council should provide a clear definition of what can be considered as crypto assets. This was echoed by the Parliament, who added that the modifications align with the recommendations of the BCBS.
The BCBS, in their consultation papers released in the last three years, recommended categorizing crypto assets based on their characteristics. They also advised banks on how to address potential risks associated with holding such assets.
The new policies will come into effect in the 2023-2024 fiscal year, and will be applicable to all banks and financial institutions operating in the European Union. Banks who are found to be in breach of the regulations will face penalties, such as fines and suspension of their operations.
It is believed that the new rules will provide clarity and certainty to the banking sector about the handling and management of crypto assets. It will also ensure that banks are able to maintain their capital reserves, and provide better protection to customers and investors.
The European Union is the first major economy to introduce such regulations, and will likely set a precedent for other countries around the world. It is hoped that the new rules will help to increase trust and confidence in the crypto sector, and lead to more widespread adoption.