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- 1 European Union now requires banks to disclose their Bitcoin and cryptocurrency holdings.
- 2 These regulations become necessary with traditional financial institutes venturing into the crypto realm.
Per the new European Union banking regulations, banks must now disclose their holdings in Bitcoin and cryptocurrencies. The E.U. is making noticeable strides in the regulatory arena. They are now mandating banks to disclose their holdings in digital assets publicly. With this move, they are trying to address the underlying risks of such assets.
Disclose Bitcoin and Crypto Holding – Says European Union to Banks
The decision was taken in a meeting held between the Council of the European Union, the European Parliament, and the European Commission. All agreed to obligate banks to disclose their cryptocurrency holdings. The entities have decided that such a step would invite the required transparency in the banking sector concerning digital assets.
Also, the Commission of the E.U. would be introducing a bill making it mandatory for the banks operating across 27 member countries of the E.U. to disclose their crypto holdings. Other than these requirements, the entities would also add other bank obligations.
One of which would be a capital requirement for crypto assets, which means that the banks operating in E.U. will have to maintain a specific amount of digital assets in their portfolio. This addition shall be in effect until the E.U. Commission develops a detailed legislative proposal.
These requirements are applied to ensure that the banks have the required preparation to handle crypto assets while being able to circumvent the underlying risks.
The proposed rules would also be applied to companies operating in the cryptocurrency ecosystem. Brokers, exchanges, lenders, and other platforms operating within digital assets must also disclose their holdings. This step’s vision is to create a uniform regulatory framework for the entire financial industry.
Moreover, the proposed bill would be integrated into the Market in Crypto Asset regulations (MiCA), scheduled to take effect from December 30, 2024. Also, the multi-stage consultation proposed in June 2023 by the European Securities and Market Authorities (ESMA) is commencing in July 2023. To gather insight from industry experts and others regarding MiCA.
With more and more financial institutions entering the crypto space, the E.U. intends to enforce the disclosure of their holdings to safeguard everyone involved. In 2022, major European banks, including Santander-owned CACEIS and Credit Agricole, started offering custodial services and facilities for buying crypto.
CACEIS, however, received approval from French regulators, and by venturing into the crypto realm, the traditional financial institution joined the Bitcoin ecosystem. Also, Banco Santander, BBVA, BNP Paribas in Europe and JPMorgan Chase and Co. (JPM), Bank of New York and Mellon Corp. (BNY), and Goldman Sachs entered the Bitcoin universe in the United States.
With around 18 months remaining for the full implementation of MiCA, the regulators are already planning for MiCA 2.0. Some experts believe its seamless implementation would be an issue—an agreement with all the member countries to acknowledge the regulations. Making them follow MiCA might cause a delay in the final implementation.
Although the member nations cannot directly deny the regulations, they can delay the procedure. Also, the crypto companies operating in the European Union are advised to adopt the regulatory framework proactively. Chainalysis’ policy head for E.U. Janet Ho, spoke about the timeline required for the companies to secure licenses under MiCA during a webinar in early June 2023.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
