Crypto-banks: EU increases regulatory pressure

EU lawmakers have always stated their desire to control banks’ dealings with cryptocurrencies. They have now taken a giant step towards achieving this goal. EU MEPs have reached agreement on the capital requirements for crypto-banks. The latter must therefore comply with the new measures in force.

New requirements for crypto-banks

After flirting with the idea of introducing new restrictions on banks, EU lawmakers have finally managed to make their plan a reality. Martin Merlin, Director of Financial Markets at the European Commission, had previously suggested the possibility of an agreement before the end of June. Well, this agreement is now a reality!

And it’s the European Parliament’s Committee on Economic and Monetary Affairs that is bringing the news to public attention. The committee tweeted: “Negotiators have reached agreement on changes to the Capital Requirements Regulation and Directive. Details to follow”.

On Tuesday 27/06 @EP_Economics negotiators struck a deal
on changes to Capital Requirements Regulation & Directive #CRR & #CRD @jonasfernandez w/ #EU2023SE details will follow pic.twitter.com/7eRCgk7Eg5

— ECON Committee Press (@EP_Economics) June 27, 2023

The changes mainly concern banks’ risk assessment of loans to businesses and individuals. MEP Jonas Fernandez also said that the new measures include “setting capital requirements for cryptos at banks”.

According to the legislators, these provisions are intended to improve ESG risk management by European banks, and thus avoid future banking crises. According to Swedish Finance Minister Elisabeth Svantesson, the new measures are also intended to strengthen the “solidity and resilience of banks operating in the EU”.

Agreement in force until Basel III banking reforms are implemented

The current agreement is transitional, according to EU legislators. However, before it becomes law, it must be voted on by member states, in the EU Council and finally by legislators. It will remain in force until the implementation of more far-reaching banking reforms, notably Basel III. The Basel Committee on Banking Supervision is currently finalizing global standards to regulate banks’ exposure to cryptos.

The EU, which recently delayed the publication of its draft law on the digital euro, has therefore taken a major step forward with this agreement. It has always wanted to limit the crypto activity of European banks.