The European Green Party proposes to tighten the conditions for the work of European banks working with digital currencies

The European Green Party has come up with a legislative initiative to increase the capital requirements for banking institutions working with cryptocurrency assets.

According to the bill, digital currencies that can be called too volatile or risky, falling under class 2, will have the most “cautious” rating. In fact, we are talking about the fact that banks will lose the ability to issue loans based on crypto assets.

“The total share of class 2 crypto assets should not exceed 1% of the capital of Tier 1 institutions,” the proposal says.

Assets that belong to class 1 are assessed as less risky. These are regulated stablecoins and securities based on distributed ledger technology. According to the proposal of politicians, they should be subject to more flexible capital requirements.

And recently, the ECB issued a statement that it will be possible to reduce the risks of the financial market by switching to the state digital currency. The agency believes that the introduction of CBDC is “the only solution” that guarantees a “smooth continuation” of the existing monetary system.

“The introduction of a CBDC is the only solution to ensure the smooth continuation of the current monetary system as physical money loses its economic viability and major digital platform cryptocurrencies continue to flood the market,” the ECB said.

The department stressed that over the past 15 years there has been more attention to the “economy of money and payments.” Therefore, people need to offer such a tool as the digital currency of the Central Bank, while eliminating the complexities associated with privacy and security.

Against this background, the initiative of the European Council to create a regulator on the territory of the EU, whose activities will be aimed at combating money laundering, looks quite logical. Analysts are confident that the new structure will take control of cryptocurrency service providers.

Do you think that the initiatives of European politicians will be useful for participants in the crypto industry?

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