EU banks are subject to tougher regulations for cryptocurrency holdings

EU authorities connect high-risk regulations for banks holding cryptocurrencies with a global oversight framework.

In a vote on Tuesday, a committee of the European Parliament determined that banks holding cryptocurrencies would be required to comply with severe capital requirements.

According to a Reuters article from Monday, a last-minute change to a measure regulating financial capital requirements for conventional institutions recommended that banks should apply a risk-weighting of 1,250% to crypto-asset holdings. This implies that, if the laws are implemented, banks will be required to cover a complete with capital reserves and will be unable to use leverage. The recommended percentage is the maximum degree of securitization proposed by Basel III reforms established by the Basel Committee for Banking Supervision, which establishes worldwide banking regulations.

According to the leaked document, the law dictates that the European Commission should “evaluate whether a specific financial approach for crypto assets is required and, if necessary, submit a legislative proposal to this purpose.”

The Switzerland-based organisation produced research in December suggesting new handling of digital assets guidelines for banks. EU officials will continue to reference the Basel Committee’s work.

Also Read: Jim Cramer Criticizes Recent Bitcoin (BTC) Price Appreciation

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