The European Union (EU) is making significant progress in reforming its banking regulations, with a particular focus on bitcoin (BTC) and cryptocurrencies. The EU is now mandating banks to publicly disclose their holdings of crypto assets. This measure aims to address the potential risks associated with these assets.
Mandatory Disclosure Of Cryptocurrency Holdings For European Banks
During a a meeting among the negotiators of the European Parliament, the Commission, and the Council of the European Union, it was agreed that banks would be obliged to disclose their cryptocurrency holdings. The European entities have recognized the need to bring transparency to the banking sector regarding crypto assets. Therefore, the European Union Commission will have to introduce a bill that will specifically address the mandatory declaration of cryptocurrency holdings for banks operating within the 27 EU countries.
In addition to disclosing holdings, European entities have also introduced a capital requirement for crypto assets. This means that EU banks must keep certain cryptocurrencies in their portfolios until the EU Commission presents a specific legislative proposal. This requirement aims to ensure that banks are adequately prepared to handle crypto assets while mitigating associated risks.
The proposed regulations for the banking sector are in line with similar requirements expected to be imposed on companies within the cryptocurrency ecosystem. Exchanges, brokers, and other platforms that deal in cryptocurrencies must also disclose their holdings. The measure aims to create a consistent regulatory framework for the entire industry.
It is expected that the proposed bill, which mandates the disclosure of cryptocurrency holdings by banks, will be integrated with the precepts established in the Regulations of the Cryptoactive Market (MiCA law). The MiCA law was recently approved for all 27 EU countries. This integration will ensure a harmonized approach to the regulation of the banking sector and companies operating within the cryptocurrency market.
More Traditional Banks Entering the Bitcoin Ecosystem
The EU intends to enforce the disclosure of bitcoin and cryptocurrency holdings by banks at the same time as the increasing involvement of major financial institutions in the crypto space. Over the past year, prominent European banks, including CACEIS (owned by Santander) and Crédit Agricole, have begun offering cryptocurrency purchase and custody services. After receiving approval from the French regulator, CACEIS has joined the group of traditional financial institutions entering the Bitcoin ecosystem.
In addition to European banks, leading financial institutions around the world have started to provide services related to digital assets. For example, Banco Santander, BBVA, Société Générale, and BNP Paribas in Europe, and BNY Mellon, JP Morgan, Goldman Sachs in the United States have entered the world of Bitcoin. This trend reflects the increasing recognition and adoption of cryptocurrencies within the traditional banking sector.
Featured image from iStock.com, chart from Tradingview
