Yesterday the European Parliament’s Economics and Monetary Affairs Committee approved a draft law to implement the Basel III rules on banking capital and liquidity requirements. Included in the draft legislation is a single clause relating to crypto assets, requiring a euro of balance sheet capital for a euro of every crypto asset held.
This particular requirement is an interim measure intended to run until the end of 2024, as the European Commission was requested to present more detailed proposals by June 2023.
Because the full coverage of crypto-assets as proposed by the Basel Committee has not yet been addressed, the abridged treatment has some issues. The proposed 1250% risk weighting for crypto assets (the 1-for-1 capital clause) refers to ‘crypto assets’ without defining the term.
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