The European Banking Authority (EBA) has finalized new rules requiring banks to hold significantly more capital against unbacked cryptocurrencies like Bitcoin and Ether.
New Capital Requirements for Banks
In its final draft of regulatory technical standards, the EBA stated that the rules aim to ensure harmonization of capital requirements on crypto-asset exposures across the EU. The framework applies to EU-based banks holding crypto assets on their balance sheets.
Classification of Crypto Assets
According to the documentation, digital assets in group 2 (a and b) are subject to a general 1,250% risk weight. Group 2b refers to unbacked crypto assets such as Bitcoin, while group 1b includes asset-referenced tokens tied to traditional financial instruments with a 250% risk weight.
Comparison with Global Trends
The EBA's stance contrasts sharply with broader regulatory trends globally. In March, the FDIC stated that institutions can engage in crypto activities without prior approval. Countries like Switzerland have also enacted measures to facilitate crypto activities.
The new EBA rules could limit bank participation in the growing digital asset market, especially as decentralized finance and tokenization continue to expand.
