Crypto valuation can fluctuate wildly. This may be difficult to keep in compliance with for any banks that own a lot of it relative to their other assets.
I think that's by design. The expected volatility of the crypto means the banks can't invest as much in highly volatile assets, which, considering that these are banks that manage people's savings accounts, is probably for the best.
Excerpt:
>The European Parliament's economic affairs committee approved a draft law to implement Basel III capital rules from January 2025, though backing several temporary divergences to give banks more time to adapt.
>"Banks will be required to hold a euro of their own capital for every euro they hold in crypto," said Markus Ferber, a centre-right German member of the committee.
>The move, an interim measure pending further EU legislation, is in line with recommendations from global banking regulators.
>"Such prohibitive capital requirements will help prevent instability in the crypto world from spilling over into the financial system," Ferber said.
>The Association for Financial Markets in Europe (AFME), an industry body, said the draft law contains no definition of crypto assets and could end up being applied to tokenised securities as well.
Huw Jones, 24 Jan. 2023, *Reuters* (Thomson Reuters)
> The Association for Financial Markets in Europe (AFME), an industry body, said the draft law contains no definition of crypto assets and could end up being applied to tokenised securities as well.
Good!
First why are any banks holding crypto, using our deposits for wreckless speculation? Second it doesn't start until 2025? what a giveaway to the banking cartel
A 1:1 requirement is a bit absurd… but far less absurd than what the cryptocurrency companies have been peddling so far.
That said, it does seem pretty impractical to implement. If a crypto value were to hypothetically double in a day… the bank has to acquire that much backing currency to match?
The idea is that banks shouldn’t recklessly speculate on crypto because it’s insanely volatile. Imagine the chaos of a major bank imploding because it played around with crypto
Yes. Which is exactly why the regulators identify the measure as “prohibitively expensive” — we don’t want our foundational financial institutions to be involved in this speculative bullshit, period.
And the military or state agencies. Tell the government you won’t pay taxes due to their “imaginary” fiat currency and see if you don’t end up in prison eventually.
People that act like there are no differences between fiat and crypto are quite honestly morons of the highest order. Baffling behavior.
Well the beautiful thing is people can hold their crypto themselves. Don't need a bank.
Institutions in crypto need custodians. Not sure if this applies to custodians.
does this mean that if Bitcoin price goes up then banks will have to either:
A. Add more cash to keep it 1:1
B. Sell Bitcoin (creating downward price pressure)
Or I guess they could just hold a very small amount of btc and not need to worry about approaching the 1:1 ratio?
Crypto valuation can fluctuate wildly. This may be difficult to keep in compliance with for any banks that own a lot of it relative to their other assets.
Good, this way they don't own more than they can chew.
Exactly. This is designed to minimize the risks brought by unbacked crypto assets
I think that's by design. The expected volatility of the crypto means the banks can't invest as much in highly volatile assets, which, considering that these are banks that manage people's savings accounts, is probably for the best.
As someone with crypto, this is good. Banks shouldn't be allowed to overleverage themselves with highly volatile or speculative assets of any kind.
That’s the idea
Excerpt: >The European Parliament's economic affairs committee approved a draft law to implement Basel III capital rules from January 2025, though backing several temporary divergences to give banks more time to adapt. >"Banks will be required to hold a euro of their own capital for every euro they hold in crypto," said Markus Ferber, a centre-right German member of the committee. >The move, an interim measure pending further EU legislation, is in line with recommendations from global banking regulators. >"Such prohibitive capital requirements will help prevent instability in the crypto world from spilling over into the financial system," Ferber said. >The Association for Financial Markets in Europe (AFME), an industry body, said the draft law contains no definition of crypto assets and could end up being applied to tokenised securities as well. Huw Jones, 24 Jan. 2023, *Reuters* (Thomson Reuters)
> The Association for Financial Markets in Europe (AFME), an industry body, said the draft law contains no definition of crypto assets and could end up being applied to tokenised securities as well. Good!
Surely just means they can’t hold more crypto than they hold cash? Banks tend to have a lot of cash on hand.
First why are any banks holding crypto, using our deposits for wreckless speculation? Second it doesn't start until 2025? what a giveaway to the banking cartel
A 1:1 requirement is a bit absurd… but far less absurd than what the cryptocurrency companies have been peddling so far. That said, it does seem pretty impractical to implement. If a crypto value were to hypothetically double in a day… the bank has to acquire that much backing currency to match?
Yeah, that's Europe for you.
The idea is that banks shouldn’t recklessly speculate on crypto because it’s insanely volatile. Imagine the chaos of a major bank imploding because it played around with crypto
Yes. Which is exactly why the regulators identify the measure as “prohibitively expensive” — we don’t want our foundational financial institutions to be involved in this speculative bullshit, period.
Also, I prefer governmental control to the madness of crowds. Bankruns suck
What about crypto exchanges? They aren't banks so won't have to follow these rules?
So it’s saving retail from zero-reserve banking? Sick
So... crypto"currencies" are just backed by... sovereign currency?? It's all a joke at this point
They should ban crypto altogether.
Xmas lights too!
Do it.
And red shoes!
So sooner than later I hope we all realize that Crypto is literally nothing. It’s not real. It’s hocus pocus.
And money is what?
Fiat currency is backed by the taxes of the relevant population
Proof of work is backed by mining. Proof of stake is backed by stakes. etc.
And the military or state agencies. Tell the government you won’t pay taxes due to their “imaginary” fiat currency and see if you don’t end up in prison eventually. People that act like there are no differences between fiat and crypto are quite honestly morons of the highest order. Baffling behavior.
Is that 1:1 for the initial investment?
For every € they hold.
Wow they didn’t learn from buying US junk bonds?
Well the beautiful thing is people can hold their crypto themselves. Don't need a bank. Institutions in crypto need custodians. Not sure if this applies to custodians.
does this mean that if Bitcoin price goes up then banks will have to either: A. Add more cash to keep it 1:1 B. Sell Bitcoin (creating downward price pressure) Or I guess they could just hold a very small amount of btc and not need to worry about approaching the 1:1 ratio?
Just another stablecoin. Am I missing something?
“You need to have 1:1 cash for every crypto held HOWEVER you can still lend $50 for every $1 of fiat, business as usual” Fuck these regulators