The European Union has reached a political agreement on new bank-capital legislation that includes regulations for crypto-assets. This decision comes in response to concerns about unbacked cryptocurrencies infiltrating the traditional financial system. The agreement was announced via a tweet from the European Parliament’s Economic and Monetary Affairs committee. It was reached after a meeting involving representatives from the European Parliament, national governments, and the European Commission. However, the legislation still needs to undergo a voting process by member states in the EU’s Council and by lawmakers, which could take several months. The deal also introduces controversial changes to the evaluation of risk associated with corporate and home loans. The new rules aim to strengthen and enhance the resilience of banks operating within the EU. The inclusion of a “transitional prudential regime for crypto assets” was confirmed but without specific details. The Basel Committee on Banking Supervision is finalizing global standards for crypto banking regulations, and initial details suggest a strict approach with a maximum risk weight of 1,250% assigned to free-floating cryptocurrencies. EU parliamentarians express a desire to implement these measures sooner rather than later. The European Commission presented a compromise proposal during the talks, which slightly eases the stringent stance on regulated stablecoins. This proposal has gained support from EU governments, who also need to agree for the bill to become law.
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