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  • K Kim and M Bacina

Show me the crypto! EU agrees rules for banks’ crypto holdings

Following a negotiation between the European Parliament, the Council and the Commission of the European Union (EU) on the 27th of June, the EU agreed that banks operating across the EU's 27 member states will face new disclosure obligations and capital requirements relating to their cryptocurrency holdings.

The deal will involve changes to the Capital Requirements Regulation and Directive and is intended to increase transparency of banks' cryptocurrency holdings, in light of the growing involvement of large financial institutions in the industry. In 2022, many large EU banks including CACEIS and Crédit Agricole initiated cryptocurrency custody and purchase services. More recently, a number of Wall Street giants have announced new initiatives in the crypto space.

To address potential risks…banks will have to disclose their exposure to crypto-assets.

In addition to this disclosure requirement, a number of broader changes were agreed to enhance the stability of the EU's banking sector including:

  1. setting capital requirements for crypto assets until the Commission puts forward a specific legislative proposal;

  2. introducing ESG as an important aspect in the EU’s financial legislation;

  3. reinforc[ing] the governing framework for the appointment of top posts in large financial institutions; and

  4. stronger requirements for third country branches.

This means that EU banks will have to declare their cryptocurrency holdings and comply with enhanced capital requirements. The changes aim to prepare EU banks to handle crypto assets while appropriately managing risks. The new rules also align with similar obligations faced by other companies within the crypto sector under the new Markets in Crypto Assets (MiCA) regulation, including exchanges and brokers, and mark an effort by the EU to establish a consistent regulatory framework.

The provisional agreement on the new banking rules now awaits approval by the Economic and Monetary Affairs Committee, a plenary vote of the Parliament and the Council’s approval.


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