EU calls for fast-tracking crypto rules to meet global 2025 deadline on capital requirements for banks
- The Basel Committee of banking regulators set a January 2025 deadline for implementing capital requirements for banks’ exposures to cryptoassets
- Banks currently have low exposure to such assets but have expressed interest in trading them on behalf of their clients, the European Commission said
Tough capital rules for banks holding cryptoassets must be fast-tracked in the European Union’s pending banking law if Europe wants to avoid missing a globally-agreed deadline, the bloc’s executive has said.
The global Basel Committee of banking regulators from the world’s main financial centres has set a January 2025 deadline for implementing capital requirements for banks’ exposures to cryptoassets such as stablecoins and bitcoin.
“For the time being, banks have very low cryptoasset exposures and only a limited involvement in providing crypto-asset-related services,” the European Commission said in an informal discussion paper seen by Reuters.
“Banks have expressed interest in trading cryptoassets on behalf of their clients and to provide crypto-assets-related services.”
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Basel’s standards are applied in the EU with a law, and a delay could mean that banks have to wait longer to enter the cryptomarket as separate EU rules for trading cryptoassets come into force in 2024.
To enforce Basel’s crypto rules, the EU could either propose a new law, or expand the banking law it is now finalising as called for by the European Parliament.
Parliament and EU states have equal say on the banking law and are due to start negotiating the final text, which could include the provisions on cryptoassets, the paper said.
This would give banks clarity on their requirements for cryptoasset exposures and would ensure that risks stemming from these are adequately addressed, the Commission paper said.
“From an international perspective, it would also allow the EU to fully align itself with the implementation deadline agreed on at Basel level.”
A separate draft law would not be forthcoming until the end of 2023 at the earliest, the paper said. Parliament goes to the polls mid-2024, making it harder to approve a new law in time for 2025.
The Commission paper also suggests that the bloc’s European Banking Authority (EBA) could coordinate with the EU’s securities watchdog ESMA to ensure that cryptoassets are properly categorised.
Basel has set punitive capital charges on unbacked cryptocurrencies like bitcoin, and less conservative charges on stablecoins, which are backed by an asset or fiat currency.
It could also be useful to mandate EBA, in cooperation with ESMA, to maintain a list of how existing cryptoassets are categorised, the paper said.
