European regulators have proposed powerful new capital necessities for insurers holding cryptocurrencies, signaling the EU’s hardest stance but on Bitcoin and different digital property.
The European Insurance coverage and Occupational Pensions Authority (Eiopa) has advisable to the European Fee that insurers impose a 100% capital requirement on all crypto property.
The transfer goals to discourage insurers from investing in digital property, because the U.S. takes steps to loosen restrictions on crypto property for conventional monetary establishments. At present, most EU insurers allocate capital equal to 60% to 80% of crypto property, however the proposed rule would mandate full protection and considerably enhance the price of holding digital property.
Eiopa’s proposal goes past cryptocurrencies corresponding to Bitcoin and Ethereum, concentrating on stablecoins pegged to fiat currencies and different tokenized property backed by conventional investments corresponding to debt or equities. It marks the primary time the regulator has imposed such extreme capital necessities for any asset class held by insurers.
Regardless of the powerful stance, the impression of the proposed guidelines is predicted to be restricted within the brief time period. In keeping with Eiopa, European insurers held round €655 million price of crypto property on the finish of 2023, lower than 0.01% of their complete €9.6 trillion in property. The vast majority of these property have been concentrated in Luxembourg, suggesting oblique publicity by means of funding funds somewhat than direct possession.
*This isn’t funding recommendation.
