The post EU banks subject to new rules on digital asset holdings appeared on BitcoinEthereumNews.com.

This month, the European Banking Authority (EBA) published its final draft of a new technical standards package for the European Union banking sector, which includes a slew of additional requirements governing banks’ ability to hold digital assets. These new standards have been adopted by the European Parliament to align with the Basel III reforms introduced by the Basel Committee on Banking Supervision (BCBS) in the aftermath of the 2007-2008 global financial crisis. The BCBS is a committee of global banking supervisory authorities established by the central bank governors of the G10 to issue and maintain international banking standards. The Basil III reforms were intended to strengthen the resilience of the banking sector. Among the changes included in the reforms was an increase in the minimum capital requirements for banks to ensure they are sufficiently able to withstand losses in times of turmoil. It also includes an overhaul of the BCBS’ risk-weighted framework, which assigns a weighting to assets based on their risk which is then used as the basis for determining how much capital a bank must have in reserve relative to the holdings of the asset. Once agreed by the BCBS, new standards are left to its member states to implement. For the EU, these implementations are known as the CRR3/CRD6, and the specifics were published this month. Perhaps most significantly, under the new EU standards, ‘cryptoasset’ exposure is assigned a risk weight of 1,250%, and a bank’s exposure must not exceed 1% of its core assets. The exceptions to this are asset-referenced stablecoins (in other words, stablecoins that are pegged to other assets as defined by Europe’s Markets in Crypto Asset regulation), which are weighted at 250%, and tokenized traditional assets including e-money tokens. Notably, the requirements adopted by the EU are stricter than those mandated under the…

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Filed under: News - @ July 30, 2024 1:24 pm