By Huw Jones
LONDON (Reuters) – Europe must move fast on a pending EU banking law if it is to avoid missing out on a globally agreed banking law. Tracking deadlines for strict capital rules for banks holding crypto assets, executives at the group said.
The Basel Committee, the global banking regulator from the world’s major financial centers, has set a January 2024 deadline for implementing bank capital requirements’ for stablecoins and Exposure to crypto assets such as Bitcoin.
“Currently, banks have very low exposure to crypto-assets and are only limitedly involved in providing services related to crypto-assets,” an informal discussion paper seen by the European Commission seen by Reuters Indicated.
“Banks have expressed interest in trading cryptoassets on behalf of clients and providing services related to cryptoassets.”
Basel standards have legal application in the EU, delayed It could mean banks have to wait longer to enter the crypto market as separate EU rules for trading crypto assets come into effect at 2024.
To enforce Basel’s encryption rules, the EU could propose new laws, or expand them, as requested by the European Parliament, which is now finalizing banking laws.
Parliament and EU countries have an equal say on banking law and will start negotiating a final text that could include crypto assets, the document said.
This will allow banks to clarify their requirements for exposure to crypto assets and ensure the resulting risks are adequately addressed, the committee document said.
“From an international point of view, this would also bring the EU fully into line with the implementation deadlines agreed at Basel level.”
Until the paper says that at the earliest 2023 Finish. Parliament is voting in the 2024 midterms, making it more difficult to approve new laws in time for 2024.
The committee paper also suggests that the EU’s European Banking Authority (EBA) could coordinate with the EU’s securities regulator, ESMA, to ensure proper classification of cryptoassets.
Capital charges for unbacked cryptocurrencies like Bitcoin, and less conservative charges for stablecoins backed by assets or fiat currencies.
It may also be useful to authorize the EBA to work with ESMA to maintain a classified list of existing encrypted assets, the newspaper said.