The European Union (EU) has reached a political agreement on new bank-capital legislation, including for cryptoassets, after lawmakers sought prohibitive rules to keep unbacked crypto out of the traditional financial system. The deal was announced in a tweet from the European Parliament’s Economic and Monetary Affairs committee, following a meeting between representatives of the European Parliament, national governments and the European Commission, which had first proposed the new rules in 2021.
The political deal, which also adjusts the risk weighting for banking assets such as corporate loans, must now be voted on by member states in the EU’s Council and by lawmakers to become legislation, a process that can take many months. Swedish Finance Minister Elisabeth Svantesson, who chaired the talks on behalf of EU member states, said in a statement that the new rules boost the strength and resilience of banks operating in the Union.
The Council statement also confirmed the deal includes a transitional prudential regime for crypto assets, without providing further details. International standard-setters at the Basel Committee on Banking Supervision are currently finalizing a global crypto banking rulebook, which suggests they’ll take a tough line, assigning the maximum possible 1,250% risk weight to free-floating cryptocurrencies.
The European Commission proposed a compromise that would soften the strict stance for regulated stablecoins, which appears to have found favor among EU governments. Once the bill is voted on and approved, it will become law.