EU banks will need to back crypto one-for-one with euros, will manage digital euro privacy

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(Kitco News) - Banks in the European Union will be required to treat crypto as one of the riskiest classes of holdings according to a leaked document that details the final set of proposed amendments to a package proposed in 2021 designed to bring E.U. bank capital rules in line with international norms.

According to a report from CoinDesk, the amendments package is set to be voted on by the EU Parliament's Committee on Economic and Monetary Affairs on Tuesday. The rule changes are designed to ensure that traditional institutions retain enough capital to sustain lending levels.

The text of the package asks the European Commission to propose a bill by June 2023 and says banks should apply a 1,250% risk weight to crypto exposures until the end of 2024. That is the maximum possible level of risk and means that banks must issue one euro of capital for each euro of crypto they hold.