EU Regulator Finalizes Strict Rules for Banks Holding Bitcoin and Ether!

Body:

The European Banking Authority (EBA) has just released its final draft rules on how banks must manage their exposure to cryptocurrencies. This is a big step towards a clear regulatory framework for digital assets in the EU.

Here's what you need to know:

* High-Risk Weight: The new rules classify unbacked cryptocurrencies like Bitcoin ($BTC ) and Ether ($ETH ) as high-risk assets. This means banks will have to set aside significant capital to cover potential losses. Specifically, they must apply a massive 1,250% risk weight, which essentially requires them to hold a euro in capital for every euro of crypto they own.

* Basel Standards: These rules are in line with global standards from the Basel Committee on Banking Supervision, ensuring that the EU's approach is consistent with other major financial jurisdictions.

* Details on Risk: The draft standards provide technical details on how banks should calculate and aggregate their crypto exposures, including credit, market, and counterparty risks.

* What's Next? The draft will now go to the European Commission. If approved, it will be forwarded to the European Parliament and the Council.

Why it matters:

This move could make it more expensive for traditional banks to hold or trade unbacked crypto, potentially affecting institutional adoption. However, it also brings more clarity and a structured approach to a previously unregulated area, which could be a positive long-term development for the industry.

Tags:

#EUCryptoRegs #Bitcoin #Ethereum #Banking

#EBA #Regulation #CryptoNews #CryptoAdoption