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The regulations could also include required provisions on Bitcoin, stablecoins, and other crypto assets.
The European Union (EU) Executive is calling for accelerated implementation of strict crypto capital rules for financial institutions with crypto assets in the awaiting banking law. The executive emphasized the approaching deadline agreed upon, adding that Europe needs to make its decision to meet the target time. When the new law passes, it will guide banks that hold crypto assets.
The global deadline was set by the Basel Committee, which consists of banking regulators from global major financial centers. The Bloc agreed on January 2025 as the deadline for enacting capital requirements for banks that hold crypto assets, including Bitcoin and stablecoins. In an informal discussion paper seen by Reuters, the European Commission said:
“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 trading crypto-assets on behalf of clients and to provide crypto-assets-related services. From an international perspective, it would also allow the EU to fully align itself with the implementation deadline agreed on as Base level.”
EU Seeks Fast-Track of Crypto Capital Orders
The European Union applies the Basel Committee standards through a law. A delay could mean that financial institutions would wait longer to gain access to the crypto space as the EU implements separate laws for trading crypto assets in 2024. The European Union has two options to pass the crypto rules by the Basel Committee. Either the Union introduces a new law or heeds the calling of the European Parliament and expands the banking law that is currently being finalized.
According to the informal paper, the Parliament and EU states will begin to discuss the final text of the crypto capital law for banks as they have equal rights. Also, the regulations could include required provisions on Bitcoin, stablecoins, and other crypto assets. Banks will then have specific orders that control their exposure to crypto assets. At the same time, the new laws address risks associated with financial institutions holding crypto assets. Taking it from the international angle, the paper said the strict crypto capital rules for banks will “allow the EU to fully align itself with the implementation deadline agreed on at Basel level.”
In addition, the earlier possible time to have a separate draft law would be towards the end of the year. Meanwhile, the parliamentary elections will be around mid-2024, which makes the approval of a new law in time for 2025 more difficult. The EU also mentioned that the European Banking Authority (EBA) could coordinate with the European Securities and Markets Authority.