EU wants bank crypto capital standards expedited.
If Europe wants to avoid missing a universally agreed-upon deadline, the bloc's leadership has said that stringent capital regulations for banks that hold crypto-assets must be fast-tracked in the pending banking legislation of the European Union.
The worldwide Basel Committee, comprised of banking regulators from the most important financial centers across the globe, has decided that the deadline for establishing capital requirements for banks' exposures to crypto-assets such as bitcoin and stablecoins would be January 2025.
The European Commission said in an informal discussion paper that banks now have "extremely modest crypto-asset exposures and only a limited role in delivering crypto-asset-related services." The European Commission stated this.
"Banks have indicated that they are interested in trading cryptocurrencies on behalf of their customers and in providing other services relating to cryptocurrencies"
A delay might mean banks must wait longer to join the crypto market since separate EU laws for trading crypto-assets will be enacted in 2024. Basel's standards are enforced in the EU via legislation. If there is a delay, this could mean that banks have to wait longer.
The European Union (EU) might propose new legislation or enlarge the banking law it is currently finalizing in response to a demand from the European Parliament to put Basel's crypto guidelines into effect.
According to the article, both the European Parliament and the nations that make up the EU have an equal vote in the banking legislation, and they are scheduled to begin negotiations on the final language, which may contain measures about crypto-assets.
According to the report submitted to the Commission, this would provide banks with clarity on their obligations for crypto-asset exposures and would guarantee that risks resulting from these are effectively managed.
"From the standpoint of the international community, it would also make it possible for the EU to completely align itself with the implementation timeline that was agreed upon at the Basel level."
The report said that a separate draught of the legislation would not be released until at the earliest, the end of the year 2023. The midterm elections for Parliament are scheduled for the middle of 2024, making it more difficult to pass new legislation in time for 2025.
The report submitted by the Commission also suggests that the European Banking Authority (EBA) of the bloc might collaborate with the European Securities and Markets Authority (ESMA) to guarantee that crypto assets are classified in the appropriate manner.
Stablecoins, backed by an asset or fiat money, have been subjected to less stringent capital requirements than unbacked cryptocurrencies like bitcoin, which have been subjected to more stringent requirements.
According to the research study, it may also be beneficial to require EBA, in conjunction with ESMA, to compile and maintain a list of the various classifications of current crypto assets.
