European Union banks must apply the highest possible risk weights to crypto assets, according to a draft law published by the European Parliament on Friday. The planned rules could determine how the traditional financial sector can engage with digital assets.
Under the draft, banks will have to disclose their direct and indirect exposure to cryptocurrencies while the European Commission develops more granular rules for the industry.
“The increasing likelihood that (financial) institutions will engage in crypto-asset related activities should be adequately reflected in the EU prudential framework in order to adequately mitigate the risks these instruments pose to the financial stability of institutions,” the Parliament’s Economic and Monetary Affairs Committee said in an explanatory text. “This is all the more urgent in light of recent adverse developments in the crypto-asset markets.” (CoinDesk)