The European Banking Authority (EBA) has finalised new draft rules that will require banks to hold far more capital against “unbacked” cryptocurrencies such as Bitcoin and Ether.
Published on Tuesday, the EBA’s final draft of regulatory technical standards aims to ensure consistent capital requirements for crypto-asset exposures across the European Union. The rules will apply to EU-based banks holding digital assets directly on their balance sheets.
Path to Approval
The draft now heads to the European Commission, which has up to three months to either approve it, amend it, or send it back for changes. Once endorsed, it will move to the European Parliament and the Council, both of which will have three months — extendable to six — to object.
If neither institution raises objections, the rules will take effect 20 days after being published in the Official Journal of the EU.
Related: EBA Expands AML Guidelines to Crypto Companies
Risk Weight Categories
The new framework builds on the Capital Requirements Regulation (CRR III), which came into force in July 2024. Under the rules:
- Group 2b assets, which include unbacked crypto like Bitcoin, carry a 1,250% risk weight.
- Group 2a assets are the same but meet certain Bank for International Settlements hedging and netting criteria.
- Group 1b assets, such as asset-referenced tokens tied to traditional financial instruments, have a 250% risk weight.
The EBA’s latest draft adds technical guidance for calculating and aggregating exposures, covering credit risk, market risk, and counterparty risk. It also enforces a strict separation of assets, meaning Bitcoin holdings cannot be offset against Ether.
Impact on Banks
The rules will have a direct impact on European banks already holding crypto. For example, Italian lender Intesa Sanpaolo, which purchased €1 million worth of Bitcoin in January, would need to hold €12.5 million in capital under the proposed framework.
However, some players will be unaffected. Fintech firm Revolut’s crypto services are handled by its non-banking subsidiary, Revolut Digital Assets Europe Ltd., keeping them off the bank’s balance sheet.
