European Banking Authority Unveils New Capital Rules for Crypto – Here’s What Banks Must Do

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.