EU Wants to Fast-Track Banking Crypto Capital Regulations

The EU is working hard to push through tough capital rules for banks that hold crypto assets.

The global Basel Committee of banking regulators from the world’s leading financial centers has set a January 2025 deadline. The rules are for capital requirements for banks that have exposure to cryptocurrencies and stablecoins.

According to a Feb. 20 Reuters report, the European Commission stated, “for the time being, banks have very low crypto-asset exposures and only a limited involvement in providing crypto-asset-related services,” before adding:

“Banks have expressed interest in trading crypto-assets on behalf of their clients and to provide crypto-assets-related services.”

Crypto Banking Rules Coming

A setback in the regulatory rollout could result in delays for banks wanting to enter the crypto market. The EU could either propose a new law or expand the banking law it is now finalizing, the report added.

According to an informal discussion paper on the new banking law, European Parliament and EU States have an equal say. They are due to begin negotiations which could include crypto assets soon.

This would give banks more clarity on crypto assets and their capital requirements to minimize risks to clients. However, a separate draft law would not be forthcoming until the end of 2023 at the earliest.

The EU is preparing to roll out an all-encompassing crypto framework called MiCA (Markets in Crypto Assets), but that is unlikely to see the light until sometime in 2024.

MiCA has been criticized for its erosion of privacy as it will require crypto exchanges and wallets to provide information on their customers to prevent tax evasion and money laundering.

Market Outlook

Crypto markets have resumed their upward march with a 2.8% gain on the day. This has pushed total capitalization to $1.19 trillion at the time of writing.

Since the beginning of the year, the market has surged 44% to a six-month high. Bitcoin is leading gains with a 3% increase to trade at just under $25,000 at the time of writing, according to CoinGecko.

Meanwhile, Ethereum has topped $1,700 following a 2.3% rise on the day. Other altcoins performing well at the moment include Ripple (XRP), Avalanche (AVAX), and Uniswap (UNI).