European Union Agree On Regulation Of Crypto Assets In Banking. The European Union (EU) has reached a political agreement on changes to the Capital Requirements Regulations and Directives, including new regulations for crypto assets.
Reporting from Cointelegraph, Saturday (1/7/2023), this move was made in response to lawmakers’ calls for stricter rules to prevent “unregistered cryptocurrencies” from infiltrating the traditional financial system.
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The announcement of the deal was announced via a tweet from the European Parliament’s Economic and Monetary Affairs committee. The tweet follows a meeting that brought together representatives from the European Parliament, national governments and the European Commission, the body that originally proposed the law in 2021.
Swedish Finance Minister Elisabeth Svantesson, chairing the talks on behalf of EU member states, said the new rules, which also recalibrate risk weights for banking assets such as corporate loans, are aimed at increasing the strength and resilience of banks operating in the Union.
Risk Weighting Rule
The Board statement further confirmed the deal includes a transitional precautionary regime for crypto assets. Initial details suggest a hardline stance, with a possible maximum risk weight of 1,250 percent set for free-floating cryptocurrencies.
This means banks must issue one euro of capital for every euro of Bitcoin (BTC) or Ether (ETH) they hold, effectively preventing them from investing in the market.
However, during the talks, the European Commission proposed a softer stance for regulated stablecoins. This proposal appears to have the support of the European Union government.
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The agreement now requires approval from member states in the EU Council and parliamentarians, which could take several months.
Furthermore, the final text will be published to coincide with the new banking regulations to be introduced by the Basel Committee on Banking Supervision, the main global standard setter for prudent bank regulations. The rule book is planned to be implemented on January 1, 2025.
The committee advises that a bank’s exposure to certain crypto assets should not exceed 2 percent and should generally be lower than 1 percent.
Previously, a British bill that proposed regulation of stablecoins and cryptocurrencies and provided oversight of the promotion of cryptocurrencies was approved by the second house of the British Parliament House.
Reporting from Yahoo Finance, Wednesday (21/6/2023), the Financial Services and Markets Bill (FSMB) rules have been approved by the House of Commons, meaning that it will now enter the final stage, namely Amendment Considerations and Royal Assent.
European Union Agree On Regulation Of Crypto Assets In Banking. The Consideration Amendment is the final reading of the bill by both Chambers. In this case, the House of Commons will make any amendments to the bill it deems appropriate before the House of Lords approves or rejects the changes. The bill will go back and forth until there is an agreement between the DPR.
Royal Assent is where the King of England formally agrees to make the statute law. The last time a bill was rejected by the King was in 1708 with the Scottish Militia Bill.
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The original bill only included plans to regulate stablecoins, but the amendments add all cryptocurrencies as regulated activities. Oversight of crypto promotion was also added when the bill was passed by Parliament.
Andrew Griffith, the Treasury Secretary for Economics, told CNBC in April crypto-specific regulations can be expected in the next 12 months, adding the UK wants to position itself as a global hub for crypto asset technology.
This comes less than a month after the European Union introduced its own Markets regulation in Crypto Assets (MiCA) into law.
Earlier, in a recent statement, former chair of the US Federal Reserve and current US Secretary of the Treasury, Janet Yellen, expressed her desire for Congress to enact more regulatory action regarding the cryptocurrency industry.
Yellen cites Treasury reports on cryptocurrencies that have shown various risks associated with the fast-growing sector. Yellen strongly believes increased regulation is needed in the crypto domain and is advocating for Congress to take action and establish policies accordingly.
“We have identified a number of crypto risks. I support the agency using the tools they have,” said Yellen, quoted from Bitcoin.com, Friday (9/6/2023).
Yellen sees several holes in the system where additional regulation would be appropriate. He wants to work with Congress to look into passing additional regulations.
On many occasions, Yellen has passed strict regulations for cryptocurrencies. During the February G20 meeting, he told journalists that building a strong regulatory framework was very important.
In November 2022, Yellen called the FTX collapse a Lehman moment and stressed the crypto industry needed adequate regulation. Yellen is known as one of the US regulators who is very vocal in criticizing crypto.
Previously, Yellen spoke about the need for adequate crypto regulation following the collapse of the FTX crypto exchange.
While stressing the importance of ensuring crypto assets have adequate customer protection, the finance minister noted it is also important to remain open to financial innovations, especially those that can lower cross-border transaction costs and help increase financial inclusion.
Earlier, Crypto exchange Gemini which is owned by the Winklevoss twins, announced plans to acquire a crypto service license for customers in the United Arab Emirates (UAE).
The move comes as Gemini acknowledges the UAE’s growing interest in cryptocurrencies and engages in positive discussions with regulators. According to co-CEOGemini Cameron and Tyler Winklevoss, the decision to expand into the UAE further was motivated by perceptions of hostility and a lack of clarity around crypto regulation in the United States.
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LaunchCripto News, written Monday (5/6/2023), Tyler Winklevoss stated that there is a concerted effort to make the UAE the home and center of crypto.
The focus is on implementing well-thought-out regulations that protect consumers while driving innovation within the company.
While Gemini has yet to decide on a specific location for its headquarters in the UAE, Abu Dhabi and Dubai have been considered as potential options.
The recent establishment of a non-US crypto derivatives platform, coupled with its plans for expansion in Asia, reflects its commitment to seek opportunities outside the United States (US) amid increasing regulatory pressure from the Securities and Exchange Commission (SEC).
The exchange is also involved in an ongoing legal dispute related to the bankruptcy of Genesis Global Capital, a crypto lender.
European Union Agree On Regulation Of Crypto Assets In Banking. As a result, more than 200,000 users of the Earn Gemini program were locked out due to the service arrangement between the two companies. Another, crypto exchange Crypto.com announced the finalization of its license from the Monetary Authority of Singapore (MAS) a year after receiving initial approval in principle.
As the regulatory landscape evolves, many cryptocurrency exchanges and related businesses are seeking new jurisdictions to establish operations and serve a broader customer base.
