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The EU keeps pushing hard for clear regulations for bitcoin and crypto industry. After the final vote on the European Union’s draft legislation to regulate cryptocurrencies, the Markets in Crypto-Assets Regulation (MiCA), was postponed until April 2023 due to technical difficulties, the European Parliament yesterday approved new banking regulations.
As Reuters reports, the Economic Affairs Committee of the European Parliament on Tuesday approved a bill to implement the final stage of the post-financial crisis global bank capital rules (Basel-III) starting in January 2025. It says volatile cryptocurrencies like Bitcoin will be considered the most risky investment.
In doing so, the EU follows the International Settlement Bank (bis), which essentially divides cryptography into two separate groups. Group 1 represents tokenized and stablecoins assets with approved stabilization mechanisms, while it is doubtful that tether or usdc satisfies the requirements.
Group 2 consists of stabilizers with no stabilisation mechanisms approved by Bis and volatile cryptocurrencies. This group classification implies that Bitcoin, Ethereum, and other cryptos force the banks to apply a 1.250% "risk weight".
It means that European banks have to hold more than one euro of free capital for each euro of cryptocurrency. Markus Ferber, a German member of the European People’s Party in the EU Parliament, said that the effort is designed to “prevent instability in the crypto world from spilling over into the financial system.”
EU The banks made it possible to own 2% of the capital in Bitcoin and crypto.
In addition, the new directive provides that banks may hold up to 2% of their capital in Bitcoin and other cryptocurrencies, while the Economic Affairs Committee of the European Parliament has approved several temporary derogations to give banks more time to adjust.
As far back as last year, the Basel committee warned against cryptocurrency. Since then, banks have been advised to invest up to 1% of their total assets in cryptocurrencies.
The guidelines approved yesterday are based on a proposal finalized by the Basel Committee on Banking Supervision on 16 December. The Basel Committee is a group of several dozen central banks and banking regulators who do not themselves have the power to legislate, but who develop the supervisory regulatory standards of banks.
As Ferber has indicated, lawmakers cite the chaos in the crypto market in recent months as further evidence that such regulation is needed. The United States, the United Kingdom, and other countries are taking similar steps, with the European Union setting a unique precedent with its requirement that banks must hold enough capital to fully cover holdings of Bitcoin and cryptocurrencies.
In particular, yesterday's approval by Parliament's Committee on Economic and Monetary Affairs is the first step in the approval process. The directive still needs to be approved by the entire European Parliament in July and submitted to national finance ministers in the Council of the European Union for the regulations to take effect.
Even though the regulations can be very negative at first glance, it should be emphasized that the BIS and the EU do not want to issue a Bitcoin and crypto ban for European banks, but only want to introduce a limit, as well as capital coverage.
Bitcoin prices these days.
At the time of the press, the BCC price was $22,735. As a result, Bitcoin continues to vary from $22,310 to $23,350 on the 4-graph.
