Swedish Financial Minister claims that the new legislation will "boost the strength and resilience of banks operating in the Union."
A key political agreement on novel bank-capital regulations, including those concerning cryptocurrencies, was reached by the European Union (EU) on June 27th.
The initiative aims to regulate the integration of unbacked cryptocurrencies within the traditional financial sector.
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After a decisive meeting between representatives from the European Parliament, national governments, and the European Commission, an announcement from the European Parliament's Economic and Monetary Affairs Committee confirmed the deal via a tweet.
The European Commission initially suggested the new regulations back in 2021.
According to a statement by Swedish Finance Minister Elisabeth Svantesson, who led the talks on behalf of EU member states, these new measures, which also redefine how banks gauge risk for corporate and home loans, would "boost the strength and resilience of banks operating in the Union."
The agreement needs the approval of EU Council members and lawmakers to transform into legislation, a procedure that can often take several months. Notably, the proposed laws incorporate adjustments in the risk weighting for banking assets such as corporate loans.
The Council statement confirmed that the agreement contains a "transitional prudential regime for crypto assets" but did not elaborate further.
Meanwhile, the Basel Committee on Banking Supervision, an international standard-setter, is working on a worldwide crypto-banking rulebook.
Early details hint at a stern approach, with a maximum possible risk weight of 1,250% assigned to unregulated cryptocurrencies. In practice, this would require banks to hold one euro of capital for every euro's worth of Bitcoin (BTC) or Ether (ETH) in their control, thus preventing them from entering the market.
The EU parliament seems to favor the prompt enforcement of these measures.
This milestone agreement on crypto bank-capital legislation showcases the EU's commitment to securing the traditional financial system from the potential risks associated with cryptocurrencies.
At the beginning of June, after passing the Markets in Crypto-Assets Bill, the EU added MiCA to the Official Journal of the European Union (OJEU).
