EU calls for acceleration of crypto capital rules for banks ahead of global deadline

The European Union (EU) Executive is calling for accelerated implementation of strict crypto capital rules for financial institutions with crypto assets in the pending banking law. The leader emphasized the approaching deadline that was agreed, and added that Europe must make its decision to meet the target. Once the new law is passed, it will guide banks that hold crypto assets.

The global deadline was set by the Basel Committee, which is made up of banking regulators from major global financial centres. The bloc agreed on January 2025 as the deadline to adopt capital requirements for banks holding crypto assets, including Bitcoin and stablecoins. In an informal discussion paper seen by Reuters, the European Commission said:

“Currently, banks have very low exposures to cryptoassets and only limited involvement in providing cryptoasset-related services. Banks have expressed interest in trading cryptoassets on behalf of clients and in offering cryptoasset-related services. From an international perspective, it will also allow the EU to fully adjust to the implementation deadline that has been agreed as a baseline.”

EU seeks fast-tracking of crypto capital orders

The European Union applies the Basel Committee’s standards through a law. A delay could mean that financial institutions will wait longer to access the crypto space as the EU implements its own laws for the trading of crypto assets in 2024. The EU has two options to adopt the crypto rules by the Basel Committee. Either the Union introduces a new law or follows the call of the European Parliament and extends the Banking Act which is currently being finalized.

According to the informal paper, the parliament and EU states will start discussing the final text of the crypto capital law for banks as they have equal rights. The regulations may also include necessary provisions on Bitcoin, stablecoins and other crypto-assets. Banks will then have specific orders controlling their exposure to crypto assets. At the same time, the new laws address risks associated with financial institutions that hold crypto-assets. From an international angle, the paper said the strict crypto capital rules for banks will “allow the EU to fully align with the implementation deadline agreed at the Basel level.”

In addition, the earliest possible time to have a separate draft law will be towards the end of the year. Meanwhile, parliamentary elections will be around mid-2024, making the approval of a new law in time for 2025 more difficult. The EU also mentioned that the European Banking Authority (EBA) could coordinate with the European Securities and Markets Authority.

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