EU Finalizes Crypto Rules for Banks: What It Means for Clients
The European Banking Authority (EBA) has published its final draft of Regulatory Technical Standards (RTS) related to crypto-assets. These rules respond to growing client demand for crypto services, including both custody and trading. The regulation provides banks with the clarity needed to expand operations while managing risks. For the EU, it marks another step in crypto’s integration into traditional finance. The question now is to what extent crypto will become more accessible to clients, and whether the new regulation will also lead to higher banking costs—and, in turn, increased fees for clients.
The new rules are highly technical and outline how financial institutions—primarily banks—should calculate and aggregate crypto-asset exposures in relation to the prudential treatment of such exposures.
The RTS address implementation aspects and aim to ensure harmonization of capital requirements on crypto-asset exposures by institutions across the EU.
“These draft RTS further develop the relevant capital treatment for credit risk, counterparty credit risk, market risk, and credit valuation adjustment risk for asset-reference tokens (ARTs) that reference one or more traditional asset(s) and ‘other’ crypto-asset exposures - including for example ARTs referencing a crypto-asset – and – unbacked crypto-assets, such as Bitcoin,” the EBA stated. [1]
The draft also includes technical elements related to netting, aggregation of long and short positions, hedge recognition criteria for other crypto-assets, and the formulas used to calculate the exposure value of crypto-assets for the market risk treatment.
What does it mean for banks and their clients?
Financial institutions with crypto exposure will need to update their risk models, compliance systems, and reporting mechanisms in line with the new RTS. This includes accommodating crypto volatility, implementing accurate valuation methods, and ensuring hedging strategies meet EBA’s strict criteria. [2]
Failure to comply with the new standards could lead to higher capital requirements and greater regulatory scrutiny. While this may translate into more expensive financial services for banks’ clients, it is also a step toward stronger safeguards for banking sector customers.
This RTS draft aligns with the elements specified in the Basel standard on Prudential Treatment of Cryptoasset Exposures [3] and is backed by and takes into account the EU Markets in Crypto-Assets Regulation (MiCA) directive.