ECB Tells EU Banks With Crypto Exposure to Hold Capital Reserves Until Laws Get Passed



The European Central Bank has told EU banks with crypto exposure to hold capital reserves according to crypto’s risk rating before crypto-related bills become law. Banks Must Adhere to Draft Standards Until at Least 2025 The ECB says that member banks wishing to engage in crypto businesses before guidance from the Basel Committee on Banking Supervision (BCBS) becomes law must comply with its risk framework. According to the central bank, these business ventures must align with the bank’s risk threshold, and corporate objectives decided upon by its board. The new Basel standards incentivize EU banks only to hold so-called unbacked crypto assets worth 1% of their Tier 1 capital and asks them to include crypto in their stress test analyses. Unbacked assets include stablecoins not backed by reserves, tokenized real-world assets, and private crypto assets like Bitcoin. Basel Crypto Risk Rubric for EU Banks | Source: European Central Bank The Basel framework assigns unbacked crypto the highest risk score of 1250%, increasing the capital requirements for banks to do business with them. 


The European Union and other Basel jurisdictions will codify the requirements of Basel’s prudential framework into law by Jan. 1, 2025. Until then, however, banks looking to branch out into crypto must adhere to the draft standards. “The BCBS standard is not yet legally binding pending its transposition in the European Union. However, should banks wish to engage in this market, they are expected to comply with the standard and take it into account in their business and capital planning,” the ECB said. The new Markets-in-Crypto-Assets bill defines crypto business lines that EU banks may engage in, amongst other things. Following a translation delay, the finalized draft of the bill will be available in Feb. 2023. EU Launches Blockchain Sandbox to Link Innovators With Regulators The European Commission recently launched the Blockchain Regulatory Sandbox on Feb. 14, 2023, to support banks’ experimentation with Distributed Ledger Technologies (DLT). Blockchains are a type of distributed ledger technology. The new sandbox will link technology innovators with regulators to ensure that new projects are legally compliant. The projects will span multiple disciplines, including supply chains, credential verification, and finance. 


Up to 20 projects will be selected annually on the grounds of their business cases, legal relevance, and conformance with EU policies. Registrations for the first wave of projects will be open until Apr 14, 2023. According to the ECB, several banks have already trialed DLT to improve efficiency, lower costs, and offer new products to customers.  On Jan. 31, 2023, the European Investment Bank issued a 50 million pound ($53 million) digital bond denominated in pound sterling on a permissioned blockchain. 


While not a bank, German manufacturing giant Siemens recently launched a tokenized euro-denominated bond on the Polygon blockchain. According to Siemens, this kind of issuance eliminates central clearing and allows the firm to sell bonds to customers directly. For Be[In]Crypto’s latest Bitcoin (BTC) analysis, click here. The post ECB Tells EU Banks With Crypto Exposure to Hold Capital Reserves Until Laws Get Passed appeared first on BeInCrypto. 


Source : [ECB Tells EU Banks With Crypto Exposure to Hold Capital Reserves Until Laws Get Passed]( by David Thomas - EU Banks Bitcoin Law•BeInCrypto by David Thomas / February 15, 2023 logo


240 rue Evariste Galois,

06410 Biot,

Sophia Antipolis

Automata Pay

65-66 Warwick House 4th

Floor, Queen Street, London

England, EC4R 1EB

Automata Pay Europe Ltd

3rd Floor Ormond Building,

31-36 Ormond Quay Upper,

Dublin 7, D07 Ee37

Automata ICO Ltd

Italian Branch

Via Archimede, 161,

00197 Roma


The purchase of digital assets is subject to a high market risk and price volatility. Changes in value can be significant and occur rapidly and without warning. Past performance is not a reliable indicator of future performance. The value of an investment and returns can fluctuate both up and down, and you may not recover the amount you invested. RISK WARNING

Automata ICO Limited has a branch in Italy with its registered office at Via Archimede, 161, Roma, Italy, and registered in Italy under number 96550860587 with the Organismo Agenti e Mediatori (OAM) as a Virtual Asset Service Provider (VASP).

Automata France SAS is a company registered in France with the company number 902 498 617. Automata FRANCE SAS is registered with the french Financial Market Authority, l’Autorité des marchés financiers (“AMF”), as a provider of Virtual Asset Service Provider under number E2023-087.

Automata Pay Europe Limited is a partner of Modulr Finance B.V., a company registered in the Netherlands with company number 81852401, which is authorised and regulated by the Dutch Central Bank (DNB) as an Electronic Money Institution (Firm Reference Number: R182870) for the issuance of electronic money and payment services. Your account and related payment services are provided by Modulr Finance B.V. Your funds will be held in one or more segregated accounts and safeguarded in line with the Financial Supervision Act. How we keep your money safe.