The European Banking Authority (EBA) has imposed strict capital requirements on EU banks holding unbacked cryptocurrencies like Bitcoin and Ether, mandating a 1,250% risk weight on such assets. This dramatically increases the capital reserves banks must hold against crypto exposures, requiring €12.5 million in reserves for every €1 million worth of Bitcoin held.
Asset-referenced tokens, including certain stablecoins, face a lighter 250% risk weight. Regulations also prohibit banks from offsetting long and short positions in unbacked cryptocurrencies against each other. These rules, embedded in the Capital Requirements Regulation (CRR III), mandate full capital backing for crypto assets.
The EBA’s conservative approach diverges sharply from global regulatory trends as jurisdictions like Switzerland and the US show greater openness to integrating crypto services within traditional finance. Notably, the rules primarily affect banks directly holding digital assets; fintech firms like Revolut remain unaffected by operating purely as intermediaries without on-balance-sheet crypto holdings.
This regulatory stance underscores the EU’s cautious positioning on cryptocurrency exposure within mainstream banking, prioritizing financial stability amid evolving digital asset markets.