The European Parliament has published a report on a bill that proposes that banks holding cryptocurrencies set aside a large amount of capital in an effort to address potential risk.
In a February 9 notification, lEU lawmakers stated that any framework applied to crypto assets should “adequately mitigate the risks of these instruments to the financial stability of institutions,” proposing that banks apply a 1,250% risk weight to their exposure to digital assets. , one of the highest risk ratings for investments. The bill suggested that such requirements take effect until December 30, 2024.
“The rapid increase in financial market activity in crypto assets and the potentially growing involvement of entities in activities related to crypto assets should be fully reflected in the Union prudential framework, in order to adequately mitigate the risks of these instruments for the financial stability of the entities,” the report said. “This is even more urgent in light of the recent adverse developments in the crypto asset markets.”
Parliament said the proposed change was in line with the recommendations of the Basel Committee on Banking Supervision, or BCBS, to deal with potential risks. Lawmakers said these rules should be applied by 2025.
The bill states that the European Commission must present a proposal on the cryptocurrency framework by June 30, taking into account the EU requirements of the Framework on Crypto Asset Markets (MiCA), it is expected a vote on the measure in April. It is likely that the full Parliament will then have the opportunity to vote on the proposal to make it law.
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