By Huw Jones
LONDON, Feb 20 (Reuters) - Tough capital rules for banks
holding cryptoassets must be fast-tracked in the European
Union's pending banking law if Europe wants to avoid missing a
globally-agreed deadline, the bloc's executive has said.
The global Basel Committee of banking regulators from the
world's main financial centres has set a January 2025 deadline
for implementing capital requirements for banks' exposures to
cryptoassets such as stablecoins and bitcoin.
"For the time being, banks have very low crypto-asset
exposures and only a limited involvement in providing
crypto-asset-related services," the European Commission said in
an informal discussion paper seen by Reuters.
"Banks have expressed interest in trading crypto-assets on
behalf of their clients and to provide crypto-assets-related
services."
Basel's standards are applied in the EU with a law, and a
delay could mean that banks have to wait longer to enter the
cryptomarket as separate EU rules for trading cryptoassets come
into force in 2024.
To enforce Basel's crypto rules, the EU could either propose
a new law, or expand the banking law it is now finalising as
called for by the European Parliament.
Parliament and EU states have equal say on the banking law
and are due to start negotiating the final text, which could
include the provisions on cryptoassets, the paper said.
This would give banks clarity on their requirements for
crypto-asset exposures and would ensure that risks stemming from
these are adequately addressed, the Commission paper said.
"From an international perspective, it would also allow the
EU to fully align itself with the implementation deadline agreed
on at Basel level."
A separate draft law would not be forthcoming until the end
of 2023 at the earliest, the paper said. Parliament goes to the
polls mid-2024, making it harder to approve a new law in time
for 2025.
The Commission paper also suggests that the bloc's European
Banking Authority (EBA) could coordinate with the EU's
securities watchdog ESMA to ensure that cryptoassets are
properly categorised.
Basel has set punitive capital charges on unbacked crypto
currencies like bitcoin, and less conservative charges on
stablecoins, which are backed by an asset or fiat currency.
It could also be useful to mandate EBA, in cooperation with
ESMA, to maintain a list of how existing cryptoassets are
categorised, the paper said.
(Reporting by Huw Jones, Editing by Louise Heavens)
Messaging: huw.jones.thomsonreuters.com@reuters.net))
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