Strict Restrictions May Come! –

The cryptocurrency vote in the European Parliament’s Committee on Economic and Monetary Affairs aims to anticipate international bank-capital norms. We have compiled the details about the cryptocurrency voting of the European Parliament for you.

Cryptocurrency vote of the European Parliament

The European Parliament’s Committee on Economic and Monetary Affairs voted to impose strict restrictions on banks wishing to hold crypto. The measures, a leaked version reported on Monday, are a proposal to estimate international norms that will limit the amount of unsupported assets Bitcoin (BTC) and Ethereum (ETH) lenders can hold before the European Commission makes a more comprehensive recommendation.

Meanwhile, Markus Ferber, the economics spokesperson for the parliament’s largest political group, said in a statement that “banks will have to hold one euro of their own capital for every euro they hold in cryptocurrencies.” Then, ‘Such prohibitive capital requirements will help prevent instability in the crypto world from spreading into the financial system.’ he added.

The scope of change can be broad

The European Financial Markets Association (AFME), a lobbying group that represents traditional financial institutions such as investment banks, has expressed concerns that the scope of the change may be too broad.

In an emailed statement, AFME called for resolution of draft issues that need to be addressed later in the legislative process. Next, ‘[Mevzuatta] There is no definition of crypto-assets, and therefore the requirement may apply to non-traditional crypto-assets for which temporary treatment is targeted, as well as tokenized securities.’ said.

Cryptocurrency Voting in Europe: Strict Restrictions May Come!

The move mimics rules set by the Basel Committee on Banking Supervision, the international standard-setter for the industry, which recommend giving unsupported crypto assets the highest possible risk weight while also capping them as a rate.

The measures still need the approval of the European Parliament to become law, and also need to be negotiated with national finance ministers meeting at the Council of the European Union (EU) as part of a broader package of bank capital reforms.

Crypto assets called the riskiest type

Banks will have to treat crypto as one of the riskiest asset classes, according to a leaked document listing the latest set of changes proposed in the 2021 package aimed at bringing European Union bank capital rules in line with international norms.

Changes to the package designed to ensure traditional institutions issue enough capital to sustain their lending levels says.

Cryptocurrency Voting in Europe: Strict Restrictions May Come!

According to the global banking rules set by the Basel Committee on Banking Supervision, this is the maximum acceptable level of risk. In practice, this means that banks cannot gain any leverage and must issue one euro of capital for every euro held.

The commission’s more detailed legislative proposal, called by the end of 2024, should provide a detailed analysis of the liquidity requirements as well as the risks of different crypto assets. The proposals said banks should also disclose their crypto exposure and risk management policies.

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