EU banking regulator finalizes capital rules for banks holding Bitcoin, Ether

The European Banking Authority has finalized rules requiring banks to assign a 1,250% risk weight to unbacked cryptocurrencies like Bitcoin and Ether.

The European Banking Authority (EBA) has finalized rules requiring banks to hold significantly more capital against so-called “unbacked” cryptocurrencies like Bitcoin and Ether.

In its final draft of regulatory technical standards released on Tuesday, the EBA said the rules aim to “address implementation aspects and will ensure harmonisation of the capital requirements on crypto-asset exposures by institutions across the EU.” The framework applies to European Union-based banks holding crypto assets on their balance sheets.

According to the accompanying documentation, digital assets in group 2 (a and b) are subject to “a general 1,250%” risk weight. Group 2b refers to “other” crypto assets, including unbacked ones such as Bitcoin (BTC). Group 2a refers to a subcategory of the same assets that meet the Bank for International Settlements’ hedging and netting criteria.

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