EU Governments Eye Riskiest Classification for Cryptocurrencies

European Union governments are signaling their support for new bank-capital standards that could designate unbacked cryptocurrencies, including bitcoin (BTC) and ether (ETH), as the riskiest assets for lenders.

These potential standards are part of a comprehensive set of banking laws currently under discussion and could be agreed upon as early as next week.

If implemented, this would have significant regulatory implications for the treatment of cryptocurrencies within the EU's financial sector.

While the European Parliament has long favored strict measures to separate cryptocurrencies from traditional banking systems, the EU's Council, which represents member states and must approve the plans, is also indicating its willingness to support such measures.


Mats Anderson, a Swedish diplomat representing financial services and markets, expressed his endorsement of the commission's proposal during a discussion on the new rules. He clarified that his remarks were based on consultations with the EU's 26 other member states.


Although Anderson initially referenced a European Commission paper, he later acknowledged that no official document had been published. In January, the European Parliament proposed assigning crypto assets, such as bitcoin, the highest risk weight of 1,250 percent.


This conservative approach, which requires lenders to hold one euro of capital for each euro of crypto issued, has raised concerns among traditional finance lobbyists who fear it may impede deal-making. However, it reflects the Parliament's cautious stance toward cryptocurrencies.


A confidential document obtained by CoinDesk reveals that the European Commission has suggested a potential easing of risk weights for stablecoins under the upcoming MiCA regulation, effective in 2024. This proposal serves as a transitional measure until the Basel Committee on Banking Supervision establishes international standards.


The broader banking package currently being discussed includes various non-crypto topics, such as assessing the risk of corporate loans and regulating foreign lenders entering the EU. Despite the complexity of these discussions, officials involved believe that an agreement is within reach after more than 18 months of negotiations.


Commission official Martin Merlin expressed optimism for a deal by the end of June, and Anderson hinted at the possibility of a political agreement during a scheduled meeting on June 15.

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