EU To Speed Up Crypto Industry Bill for Banking System
2023.02.20 09:39
EU To Speed Up Crypto Industry Bill for Banking System
By Tiffany Smith
Budrigannews.com – The European Union’s executive has stated that if Europe is to meet a globally agreed-upon deadline, strict capital requirements for banks holding cryptoassets must be fast-tracked into the pending banking law.
The implementation of capital requirements for banks’ exposures to cryptoassets like bitcoin and stablecoins has been given a January 2025 deadline by the global Basel Committee, which is made up of banking regulators from the major financial centers around the world.
In an informal discussion paper seen by Reuters, the European Commission stated, “For the time being, banks have very low crypto-asset exposures and only a limited involvement in providing crypto-asset-related services.”
“Banks have expressed interest in providing services related to crypto-assets and trading crypto-assets on behalf of their clients.”
A delay could mean that banks have to wait longer to enter the cryptomarket because separate EU rules for trading cryptoassets come into effect in 2024. The EU applies the Basel standards through a law.
The EU could either propose a new law or expand the banking law it is currently finalizing to enforce Basel’s crypto regulations, as requested by the European Parliament.
According to the paper, Parliament and EU states have equal say over the banking law and are scheduled to begin negotiating the final text, which may include cryptoassets provisions.
According to the Commission paper, this would clarify banks’ requirements for crypto-asset exposures and ensure that these risks are adequately addressed.
“From a global perspective, it would also enable the EU to fully comply with the Basel-agreed-upon implementation deadline.”
According to the newspaper, a separate draft of the law would not be released until at least the end of 2023. Midway through 2024, Parliament will go to the polls, making it more difficult to approve a new law in time for 2025.
The paper from the Commission also suggests that the EU’s securities watchdog ESMA and the bloc’s European Banking Authority (EBA) could work together to ensure that cryptoassets are properly classified.
Bitcoin and other unbacked cryptocurrencies are subject to harsh capital charges from Basel, whereas stablecoins, which are backed by an asset or fiat currency, are subject to less stringent charges.
According to the paper, mandating EBA to keep a list of how existing cryptoassets are categorized in conjunction with ESMA could also be beneficial.