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The Authority Takes a Stance: New Crypto Regulations Set to Transform Banking

The European Banking Authority (EBA) has introduced draft Regulatory Technical Standards (RTS) to address how financial institutions should manage crypto-asset exposures.

These new rules are part of the European Union's ongoing effort to integrate cryptocurrency into its regulatory framework.

The RTS outline methods for banks to report and calculate risks associated with various types of digital assets, including Bitcoin and asset-referenced tokens.

They specify capital requirements spanning credit and market risks, among others, to enhance risk management.

Institutions will need to implement new formulas and consider aspects like hedging and position aggregation when assessing their crypto exposures.

The draft regulations aim to align with international standards and reflect the European Union’s Markets in Crypto-Assets Regulation (MiCA).

One notable change is the removal of the previously suggested "prudent valuation" requirement, simplifying the reporting process for crypto positions.

These interim measures allow banks to engage in activities like custody and trading of crypto-assets while adhering to necessary safeguards.

To comply with the new RTS, institutions must update their risk models and compliance systems, preparing for the evolving landscape of digital assets.

As client demand for crypto services continues to rise, these regulations provide clarity, crucial for banks seeking to navigate the complexities of the crypto market safely.