European Union governments are showing support for new bank-capital standards that could classify unbacked cryptocurrencies, like bitcoin and ether, as the riskiest type of assets for lenders.
Talks on new legislation indicate that these digital assets may be assigned the maximum risk weight as part of extensive banking laws expected to be agreed upon as early as next week.
The European Parliament has previously expressed favor for “prohibitive” measures to isolate cryptocurrencies from the banking system, and now the EU’s Council, representing member states, also seems receptive to the plans.
Mats Anderson, the Swedish diplomat chairing the talks, referred to a European Commission paper as a basis for progress, although the document has not been officially published.
The European Parliament initially proposed a conservative approach, suggesting a 1,250 percent risk weight for crypto assets, which could hinder deal-making according to some traditional finance lobbyists.
However, a secret document reveals that the commission intends to allow lower risk weights for stablecoins regulated under the upcoming MiCA law, serving as a transitional measure until international standards from the Basel Committee on Banking Supervision are finalized in 2024.
While the banking package encompasses various contentious topics beyond cryptocurrencies, officials involved in the talks believe that a deal is now within reach after more than 18 months of negotiations.
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Martin Merlin, a commission official, expressed hope for an agreement by the end of June, and Anderson even hinted at the possibility of a political deal during a meeting scheduled for June 15
