The European Parliament has released a report on a draft bill proposing that banks holding cryptocurrencies set aside a large amount of capital in an effort to address potential risk.
In a Feb. 9 notice, EU lawmakers said any framework applied to crypto assets should “adequately mitigate the risks of these instruments for the institutions’ financial stability,” proposing banks apply a 1250% risk weight on their exposure to digital assets — one of the highest risk ratings for investments. The proposed law suggested that such requirements go into effect until Dec. 30, 2024.
“The rapid increase in the financial markets’ activity on crypto-assets and the potentially increasing involvement of institutions in crypto-assets related activities should be thoroughly reflected in the Union prudential framework, in order to adequately mitigate the risks of these instruments for the institutions’ financial stability,” said the report. “This is even more urgent in light of the recent adverse developments in the crypto-assets markets.”
The parliament said the proposed change was in line with recommendations from the Basel Committee on Banking Supervision, or BCBS, on addressing potential risks. Lawmakers said these rules should be implemented before 2025.
Related: Bitcoin part of highest risk category in Basel’s new bank capital plan
The draft bill said the European Commission should submit a proposal on the crypto framework by June 30, taking into account requirements under the EU’s Markets in Crypto-Assets framework, or MiCA — a vote is expected on the measure in April. The full parliament will likely then have the opportunity to vote on the proposed bill to become law.
This news is republished from another source. You can check the original article here.
Be the first to comment