European banking authorities (EBAs) have finalized rules that require banks to hold significantly more capital for so-called “non-backed” cryptocurrencies such as Bitcoin and ether.
In its final draft of regulatory technical standards released Tuesday, the EBA aims to “address aspects of implementation and ensure harmonization of capital requirements for crypto asset exposure by institutions across the EU.” The framework applies to European Union-based banks that hold crypto assets on their balance sheets.
According to the accompanying documents, Group 2 (A and B) digital assets are subject to a weight of “general 1,250%” risk. Group 2B refers to “other” crypto assets, including non-storage assets such as Bitcoin (BTC). Group 2A refers to the same asset subcategory that meets bank hedging and netting criteria for international settlements.
Group 1 B refers to so-called asset referenced tokens tied to traditional financial instruments. This group is subject to a risk weight of 250%.
These risk weights were introduced as part of the Capital Requirements Regulation (CRR III) and came into effect in July 2024.
The latest EBA draft adds the technical factors needed to calculate and aggregate cryptographic exposures, such as credit risk, market risk, and counterparty risk modeling. It also introduces strict separation between assets. In other words, Bitcoin and Ether (ETH) cannot be mutually offset.
When the final draft goes to the European Commission, Brussels will spend up to three months determining whether to approve it in an amendment or amendment, or whether to send it back for reorganization. Once approved, the bill becomes a delegated regulation, transferred to the European Parliament and Council, with the three-month challenge window expandable to 6.
Without the European Parliament or the Council opposed, the draft will come into effect within 20 days of publication in the official EU magazine.
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EBA completes strict cryptographic rules
The rules are expected to have a direct impact on European banks that already hold crypto on their balance sheets. Italian bank Intesa Sanpaolo, which bought Bitcoin worth 1 million euros in January, will need to win 12.5 million euros for its position under the new framework.
Fintech’s company Revolut is unlikely to be affected by this change. Bank crypto services are managed by Revolut Digital Assets Europe Ltd, an unbalanced sheet and non-bank arm.
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Europe swims with the tide
The EBA stance is in contrast to the wider direction of global regulators moving to accept crypto within existing financial frameworks.
In late March, the Federal Deposit Insurance Corporation (FDIC) said in a letter that surveillance agencies, including banks, will be able to engage in crypto-related activities without prior approval.
In April, Switzerland passed an amendment to the DLT Act, allowing banks to custody securities and providing guarantees to Stablecoin issuers under a clear legal framework.
Also, recent reports suggest that US President Donald Trump is planning to sign an executive order directing bank regulators to investigate allegations made by the cryptocurrency sector and conservatives to break away.
The US banking sector has already attracted attention, with JPMorgan Chase reportedly investigating crypto-backed loans, indicating a potential change in how US banks view crypto assets.
The new EU capital rules could limit banks’ participation in the growing digital asset market, particularly as decentralized finance and tokenization continue to expand into mainstream financial services.
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