European Banks to Disclose Exposure to Crypto Assets

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Banks in the European Union will have to disclose their exposure to cryptocurrencies, EU institutions announced. The obligation will be introduced under a deal to implement globally agreed regulatory standards meant to improve the resilience of the financial institutions.

Deal Reached to Finalize EU Reforms of Banking Rules Addressing Crypto Risks

Representatives of the European Parliament, the Council and the Commission reached a provisional agreement to amend EU regulations on capital requirements for banks. The changes seek to make EU banks more resilient to economic shocks by implementing the Basel III global standards while taking into account European specifics.

The third Basel Accord was agreed by the European Union and its G20 partners in the Basel Committee on Banking Supervision. It represents a framework of international standards for bank capital adequacy, stress testing, and liquidity requirements which was first announced in late 2010 but its implementation was repeatedly postponed until 2025.

The negotiators also agreed on a transitional regime for crypto assets. To address specific, associated risks, banks in the European Union will be required to disclose their exposure to cryptocurrencies and other digital assets.

“Given the ongoing work of the Basel committee, it was decided that the Commission should come up with a relevant legislative proposal to implement these future Basel standard and specify the prudential treatment of such exposures during the transitional period,” the European Parliament said in a press release.

Also, by Dec. 31, 2028, the European Commission is expected to assess the overall state of the banking system in Europe’s single market, working closely with the European Banking Authority (EBA) and the European Central Bank (ECB). The executive body in Brussels will then report to the European Parliament and the Council on the “appropriateness of the Union regulatory and supervisory frameworks for banks.”

In January of this year, members of the European Parliament’s Committee on Economic and Monetary Affairs (ECON) supported a bill designed to enforce the global bank capital rules, including strict regulations meant to cover crypto-related risks for banking institutions keeping digital assets. ECON must also approve the latest agreement.

The deal comes after in April European lawmakers greenlighted the EU’s new Markets in Crypto Assets (MiCA) law which introduces comprehensive regulations for the crypto industry in Europe. The legislation was also adopted by the EU Council in May and will be implemented across the European Union by 2025.

How could the upcoming crypto disclosure requirements for EU banks affect cryptocurrency users in Europe? Share your thoughts on the subject in the comments section below.