Impose strict capital requirements on banks that own bitcoin and cryptocurrencies

 

Impose strict capital :

requirements on banks that own bitcoin and cryptocurrencies

Banks will be allowed to hold 2% of capital in bitcoin

However, they are required to own one euro in capital for each euro in cryptocurrency.

EU lawmakers voted to impose strict capital requirements on banks holding cryptocurrencies, according to a Reuters article.

In an effort to prevent instability in the cryptocurrency

world from extending into the financial system

Says Marcus Verbier :

European People's Party economic spokesman in the European Parliament

Banks will be required to retain euros of private capital for each euro. They keep cryptocurrencies ".

Lawmakers cite the chaos in markets seen over the past few months as further evidence that such regulation is necessary.

With things like the FTX collapse

Celsius and others in the minds of users

• The passage of this law is expected to be part of

• a larger set of regulations aimed

• aimed at bringing the EU in line with world norms.

Reflects the regulations passed and proposed

in accordance with the Basel Committee of the Bank for International Settlements

It also :

suggested the highest possible level of

risk weight for unsupported cryptocurrency holdings.

Their recommendations put a 2% limit on first

level capital that can be held in unsupported cryptocurrencies.

1. There is no definition of
2. encrypted assets in legislation
3. and therefore the requirement may apply to symbolic securities

In addition to non-traditional cryptocurrency assets targeted by temporary processing, "AFME said an EU lobby group representing financial organizations such as investment banks

The current form of the law may be unclear

but draft cases may be resolved later.

The European Parliament's Economic and Monetary Affairs Committee voted to approve the measures, so that they could come into full force.

It must also be approved by the European Parliament as a whole and submitted to the Council's meeting of national finance ministers from the European Union.

Regulators can impose strict capital requirements on banks that

1. own or deal in bitcoin and other cryptocurrencies
2. just as they do with traditional financial assets.
3. This would ensure that

these banks have sufficient reserves to cover

potential losses from their cryptocurrency activities.

However :

it is important to note that the regulatory landscape of cryptocurrencies continues to evolve and that banks' specific requirements may vary by jurisdiction.

In addition :

some argue that strict regulations can stifle innovation

and limit the growth of the cryptocurrency market.