European regulators are moving to implement stricter rules for insurers investing in digital currencies, marking a significant shift in the EU’s approach to cryptocurrencies.
The European Insurance and Occupational Pensions Authority (Eiopa) has recommended that insurers be required to hold capital equivalent to 100% of the value of any crypto assets they hold.
This proposal aims to discourage further investment in digital assets by making it much more expensive for insurers to hold such assets.
Under the current system, most insurers are required to allocate capital covering between 60% and 80% of their crypto holdings. The new regulation, however, would impose full capital coverage for all crypto assets, including popular cryptocurrencies like Bitcoin and Ethereum, as well as stablecoins and tokenized assets tied to traditional financial instruments like debt or equities.
This would be the first time Eiopa has set such stringent capital requirements on any asset class held by insurers.
While the proposed rules represent a tougher stance on cryptocurrencies, they are not expected to have a major immediate impact. As of late 2023, European insurers held just €655 million worth of crypto assets, which constitutes less than 0.01% of their total assets, valued at €9.6 trillion.
The majority of these holdings are in Luxembourg, indicating that exposure is likely through investment funds rather than direct crypto ownership.
Editorial Team
Reporter at Coindoo
Source: https://coindoo.com/eu-targets-insurers-with-new-100-capital-rule-for-crypto-assets/