European Banking Authority Unveils New Capital Rules for Crypto – Here’s What Banks Must Do
Main Idea
The European Banking Authority (EBA) has introduced new capital rules for crypto-asset exposures under the Capital Requirements Regulation, aligning with Basel and MiCA frameworks, while the European Central Bank (ECB) reaffirms its commitment to maintaining physical cash alongside digital innovations like the digital euro.
Key Points
1. The EBA released draft Regulatory Technical Standards (RTS) detailing capital treatment for crypto-asset exposures, removing the 'prudent valuation' requirement for fair-valued crypto exposures.
2. The new regulations align with the Basel Committee’s guidance and the EU’s Markets in Crypto-Assets Regulation (MiCA).
3. Institutions with crypto exposure must update their risk management and hedging strategies to comply with the EBA’s criteria.
4. The ECB emphasized the continued importance of physical cash, planning to modernize it to coexist with digital payments and the upcoming digital euro.
5. The draft RTS provides transitional rules for crypto-asset exposures while a more permanent framework is developed.
Description
The European Banking Authority (EBA) has released its draft Regulatory Technical Standards (RTS) on Tuesday detailing how financial institutions must treat crypto-asset exposures under the Capital Requirements Regulation. These draft rules aim to offer a framework for calculating risks associated with digital assets as the European Union integrates crypto more firmly into its regulatory architecture. EBA Defines the Capital Treatment for Crypto Assets The new regulations provide a framework for ...
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