EU panel to vote on tighter crypto rules for banks

Banks would have to set aside a punitive amount of capital to cover holdings of cryptoassets under a draft law due to be voted on by lawmakers on Tuesday.

The European Parliament's economic affairs committee is due to vote on cross-party compromises, seen by Reuters, on a draft law which implements remaining elements of Basel III, a global accord which forces banks to hold more capital to cope with market shocks unaided by taxpayers.

One amendment states that banks would have to apply a risk-weighting of 1,250% of capital to cryptoassets exposures, meaning enough to cover a complete loss in their value.


This is in line with recommendations from the global Basel Committee of banking regulators in December.

The amendments also introduce a definition of "shadow banking", the vast sector of insurers, hedge funds and investment funds that make up about half the world's financial system.

The amendment requires the EU's executive European Commission to publish a report by June 2023 analysing the possibility of introducing prudential limits on banks' exposures to shadow banks.

Amendments also require renumeration policies at banks should be aligned with their transition plans to address environmental, social and governance (ESG) risks over the short, medium and long term.

The draft law introduces a new "fit and proper" regime for appointing bankers, with amendments saying there should be targets for a bank's management body.