On Tuesday, European Union lawmakers backed a draft law to implement the latest phase of post-financial global banking capital rules, adding so-called “prohibitive” requirements to cover risks from cryptoassets.
The Committee on Economic Affairs of the European Parliament approved the draft law on the introduction of Basel III capital rules
Basel III is a document of the Basel Committee on Banking Supervision, which contains methodological recommendations in the field of banking regulation and was approved in 2010-2011. from January 2025, although it supported several temporary variances to give banks more time to adapt.
The US, UK and other countries are taking such measures, but the committee introduced new elements into the draft law, including a requirement for banks to have enough capital to fully cover their holdings of cryptocurrencies.
“Banks will be required to hold a euro of equity for every euro they hold in cryptocurrency,” said Markus Ferber, a center-right member of the committee from Germany.
This step is a temporary measure for the adoption of new EU legislation and is in line with the recommendations of global banking regulators.
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“Such capital requirements will help prevent volatility from spilling over from the cryptosphere to the financial system,” Ferber said.
The Association of Financial Markets in Europe (AFME) said the draft law does not include a definition of cryptoassets and may eventually also apply to tokenized securities.
EU countries have already approved their version of the draft law, and lawmakers will now discuss with them the final text with the following changes.
Foreign banks operating through branches in the EU will be closely watching the discussion. Member states have taken a softer approach to when foreign banks serving customers in the EU can open a branch or convert a branch into a more capitalized subsidiary, but EU lawmakers took a tougher line on Tuesday.
The EU is seeking “strategic autonomy” in capital markets as it faces a rival financial center on the approach to its territory after Brexit.
Source: Reuters
