EU reaches agreement on crypto-asset regulation in the banking sector

European Parliament deputies agreed a transitional prudential regime to shield the financial system from “unbacked cryptoassets” and to reduce risks for banks holding such assets.

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

Under the established capital requirements, banks will be obliged to disclose information about their interactions with cryptoassets. Further details were promised later by negotiators.

The new rules will apply until the European Commission proposes a concrete legislative instrument and its adoption aligns with Basel III standards, which are scheduled to be implemented by 1 January 2025.

The provisional agreement now awaits approval by the Economic and Monetary Affairs Committee, and then it will be debated at the plenary session of the EU member states.

The aim is to address potential risks to institutions arising from their interaction with cryptoassets that are not adequately covered by the existing prudential framework, the European Parliament said.

Earlier this year, European Parliament lawmakers voted for stringent capital requirements for banks holding cryptoassets in the EU. The amendment envisaged applying a 1250% risk-weighted ratio to cryptoassets.