European Central Bank Moves Ahead of Pan-EU Licensing Rules as Banks Test Crypto Waters

The European Central Bank (ECB) said on Wednesday it will harmonize how banks offer cryptocurrency to ensure they have sufficient capital and expertise in an area that some EU lawmakers have dubbed the Wild West. described in. Following national security measures to combat money laundering and terrorist financing, many crypto companies such as Binance and have been authorized in EU countries such as Italy, France, Spain, Greece or Germany.

This comes ahead of pan-EU licensing rules from 2023 at the earliest.

ECB Said that banks are also considering whether to join or not crypto territories, but that national rules varied quite widely.

“In Germany, certain crypto activities are subject to a banking license requirement and, to date, several banks have requested to be authorized to conduct these licensed activities,” the ECB said in a statement.

“It is in this context that the ECB is taking steps to harmonize the evaluation of licensing requests.”

The ECB, which directly controls top euro area lenders such as Deutsche Bank, UniCredit and BNP Paribas, said it would investigate whether crypto activities were in line with the bank’s risk “profile”, which determines how much capital it holds. Have to do

The ECB will also examine whether a bank can identify and assess risks from cryptocurrencies and whether board members and IT staff have “strong experience” in this area.

“Importantly, working closely with national observers, the ECB will strive towards greater consistency in prudential assessments across national regimes,” the ECB said.

Global regulators at the Basel Committee in Switzerland are assessing whether there should be a specific capital buffer for key holdings crypto asset in banks.

The European Union is also reviewing its bank capital requirement law.

Ville Niinisto, a Green Party member of the European Parliament, has proposed an amendment that the bank’s holdings Bitcoin And other cryptocurrencies that are not backed by assets must not exceed 1 percent of the bank’s core Tier 1 measure of capital.

Such a limitation would require a full parliament and the support of EU states for it to become law, a lengthy process.

Ninisto also proposed that regulators should assess whether blockchain requires bespoke capital requirements, which underpin crypto.

© Thomson Reuters 2022

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