EU lawmakers back stricter crypto rules for banks
Zoe Wyatt and Dion Seymour comment on EU lawmakers backing a draft law to add ‘prohibitive’ requirements to cover risks from crypto assets.
According to Zoe Wyatt, partner and Head of Crypto at Andersen LLP: “Whilst crypto is still nascent, it’s important to protect the traditional banking system from associated turbulence, and I welcome appropriate capital requirements. As we’ve seen with FTX and other exchanges operating like banks, rehypothecating under collateralised volatile assets is not viable.”
For Dion Seymour, Digital Assets Technical Director at Andersen LLP: “The application of Basel III was expected and is necessary to provide consumer protection and stop bank runs. However, for crypto assets this is difficult to get right – the proposed level of capitalisation may reflect the volatile nature but will be prohibitive to bank adoption. The regulations introduce a definition for shadow banking, which makes up a significant proportion of global financial trade, and falls outside the realm of traditional banking and regulation – much like crypto. However, Basel III does not require such intermediaries to have the same capitalisation requirements as suggested for the crypto-asset sector. Whilst we welcome more regulatory actors participating in this sector, in our view, there needs to be the consistency of treatment.”
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