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EU Considers Restrictions on Banks Holding Crypto Assets
The EU is proposing a draft law for crypto assets collateral for banks, but the banks lobby group recommends waiting for crypto market maturity before introducing stricter regulations.
The European Union's Economic and Monetary Affairs Committee is proposing a draft law that would classify crypto assets as the most risky category for banks. According to the draft law, banks would be required to provide collateral of 1 euro for every 1 euro worth of Bitcoin or altcoin they hold. This step is aimed at preventing crypto assets from spilling over into the financial system.
The proposed regulations would require banks to provide collateral for crypto assets, placing them in the most risky category among bank assets. The draft law states that banks would have to provide 1 euro worth of collateral for every 1 euro worth of Bitcoin or altcoin they hold. This is intended to prevent crypto assets from posing a risk to the financial system.
Support from the EU
The draft law has been voted on by the Economic and Monetary Affairs Committee of the European Parliament. Markus Ferber, the committee's vice-chairman, stated that the aim of the proposed regulations is to prevent the instability seen in crypto assets from spilling over into the financial system. Ferber also believes that the new collateral requirements will help to reduce risks.
The Basel Committee, of which Turkey is also a member, had previously introduced regulations for crypto assets. However, these regulations did not include any collateral requirements. The Basel Committee, which sets binding rules for bank capital, imposed a 1% limit on all crypto assets. This means that stablecoins, tokenized traditional assets, and unsupported crypto assets now take up a place in bank reserves.
However, the EU does not consider a 1% limit on crypto assets to be sufficient for banks. Therefore, stricter rules for banks are being considered. The European Financial Markets Association (AFEM), on the other hand, has chosen to approach the draft law cautiously.
AFEM, the lobby group for banks, stated that the EU should wait for the market to mature before introducing stricter regulations. They also stated that the EU should focus on creating a level playing field for crypto assets and traditional assets.
The draft law is still subject to approval by the European Parliament and discussion by national finance ministers in the EU Council. The proposed regulations aim to prevent crypto assets from posing a risk to the financial system. However, the exact details and consequences of the draft law are yet to be determined.