European Parliament Votes on Rules for Banks Holding Digital Assets

• The European Parliament’s economic and monetary affairs committee has voted on policies for banks holding digital assets such as Bitcoin and Ethereum.
• The new policies require banks with crypto holdings to hold up to 1,250 percent of the amount they hold in crypto assets.
• The modifications align with the measures by the organization in charge of international banking standards (BCBS, the Basel Committee On Banking Supervision).

The European Parliament’s economic and monetary affairs committee has voted on policies that will allow banks to hold digital assets such as Bitcoin and Ethereum. The new policies require banks with crypto holdings to hold up to 1,250 percent of the amount they hold in crypto assets. This is an effort to ensure that banks have enough capital to cover any potential losses from these digital assets.

The policy update also aligns with the measures recommended by the Basel Committee On Banking Supervision (BCBS). The BCBS recommends categorizing crypto assets based on consultation papers released in the last three years, as well as advising banks on how to address possible risks.

In a statement regarding the new development, a spokesperson for the AFME (Association for Financial Markets in Europe), Caroline Liesegang, said that the Parliament, Commission, and Council should provide a clear definition of what can be considered as crypto assets.

The European Parliament’s economic and monetary affairs committee also noted that the modifications are in line with the BCBS’s recommendations. This includes a requirement that banks must set aside capital to cover any losses associated with their crypto holdings.

The new policies come at a time when the cryptocurrency market has grown significantly in recent years. The market capitalization of Bitcoin and Ethereum, for example, has increased by more than $1 trillion in the last five years.

The new law is an important step in improving the safety and stability of the European banking sector. It will also provide banks with the necessary capital to cover any losses associated with their digital asset holdings. This will help ensure that the banking sector remains stable and secure, while also helping to boost investor confidence in the sector.