The European Union is pushing hard to impose strict capital rules on banks holding crypto assets.
The Basel Committee, the global banking regulator from the world's major financial centers, has set a deadline of January 2025. These rules apply to the capital requirements of banks exposed to cryptocurrencies and stablecoins.
According to a Reuters report on Feb. 20, the European Commission stated that “banks currently have very low exposure to cryptoassets and are only limitedly involved in providing services related to cryptoassets,” before adding: “Banks have expressed interest in trading crypto-assets on behalf of their clients and to provide crypto-assets-related services.”
The setback in the regulatory rollout could cause delays for banks looking to enter the crypto market. The report added that the EU could propose a new law or expand the banking law currently being finalized.
The European Parliament and EU states have an equal say, according to an informal discussion paper on the new banking law. They will begin negotiations, which may soon include crypto assets. This will give banks a clearer picture of crypto assets and their capital requirements to minimize client risk. However, a separate draft law will not be introduced until the end of 2023 at the earliest.
The European Union is preparing to launch an all-encompassing crypto framework called MiCA (Market for Cryptoassets), but it won’t see the light of day until sometime in 2024.
MiCA has been criticized for its invasion of privacy, as it will require cryptocurrency exchanges and wallets to provide information about their customers to prevent tax evasion and money laundering. The cryptocurrency market has resumed its uptrend, up 2.8% on the day. At the time of writing, this has pushed the total market capitalization to $1.19 trillion.
Since the start of the year, the market has soared 44% to a six-month high. At the time of writing, bitcoin led the way with a 3 percent gain, trading just below $25,000, according to data from CoinGecko.
Meanwhile, Ethereum has breached $1,700 after gaining 2.3% on the day. Other altcoins that are doing well right now include Ripple (XRP), Avalanche (AVAX) and Uniswap (UNI).
