Crypto Assets And Banks: Why EU Is Establishing Capital Requirements
Cryptocurrency is taking the European Union (EU) into uncharted territory as it introduces a groundbreaking bank capital policy that includes regulations...
- The European Union (EU) has introduced a groundbreaking bank capital policy specifically tailored for cryptocurrencies.
- The policy incorporates Basel III, an internationally recognized banking standard.
- Financial institutions must allocate a risk weight to their exposures to crypto-assets when calculating their own funds requirements.
- The EU has set a risk weight of up to 1,250% for cryptocurrencies, requiring banks to possess more capital for every unit of crypto assets.
- The policy outlines distinct capital and liquidity requirements for different categories of crypto-assets.
- A standardized "fit and proper" framework is being established to regulate the suitability of key function holders and members of the management body within financial institutions.
- The proposed bank capital policy has been positively received and is seen as a major step forward in ensuring the resilience of the banking sector.
The overall sentiment of the article is positive, highlighting the EU's proactive stance in adapting to the digital currency market and reinforcing the resilience of the banking sector.