European Union legislators have supported legislation establishing rigorous guidelines to handle risks associated with cryptocurrencies as well as new capital requirements for financial institutions.
The latter, which relates to banks holding digital assets, is anticipated to take effect in January 2025.
The Basel III Capital Regulations for Banks Draft Law is approved by EU legislators.
A draft intended to implement the most recent international bank capital regulations was backed on Tuesday by members of the Committee on Economic and Monetary Affairs (ECON) of the European Parliament
The MPs have also inserted special regulations addressing dangers related to crypto assets, according to a report from Reuters.
With the European draft law, ECON is implementing further rules, requiring banking institutions to retain enough capital to fully cover their holdings of digital assets.
Markus Ferber, a center-right committee member from Germany, stated that “banks will be compelled to keep a euro of their own capital for every euro they have in cryptocurrency.”
ECON adopts a stricter stance than EU Member States
The member states have previously adopted a previous version of the law, and the European Parliament will need to negotiate the final draft with them.
For instance, the draft lacks a description of crypto assets, according to the Association for Financial Markets in Europe (AFME).
The new Markets in Crypto Assets (MiCA) regulation was agreed upon last summer by EU institutions and member states.