The European Union is voting to decide whether to force banks to move away from cryptocurrency

The European Union is voting to decide whether to force banks to move away from cryptocurrency

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Answer The European Union is voting to decide whether to force banks to move away from cryptocurrency

In a move that has the potential to cut off the cryptocurrency sector from the banking and finance sectors, the European Union will vote on Tuesday on a bill that would require banks to hold reserves of more than 100% to avoid any loss from crypto companies.

According to ReutersOne of the proposals and amendments put forward to the vote would require banks to set a risk weight of 1,250% for all capital exposed to crypto assets, meaning that banks would be able to cover 100% of any potential losses.

The new law was drafted to include the last elements proposed in Basel III, a global agreement that requires banks to hold more capital so they can deal with market shocks without having to rely on taxpayers.

Read:Multichain Collaborates with RSK Blockchain to Promote Access to DeFi on Bitcoin

Crypto and the banking industry:

The Reuters article also looks at how the amendments apply to shadow banking in the world.

This term (shadow banking) is used to denote banking that is usually conducted in a less regulated manner, and applies to insurance companies, hedge funds and investment funds, which are said to make up about half of the banking sector in the world.

The amendment would require a report from the European Commission that looks at the possibility of banks being required to have limited exposure to shadow banking.

In conclusion, it can be said that all the laws and statements currently issued from Europe are designed to cut off arms and legs from the cryptocurrency industry and severely reduce its ability to operate.

It could certainly be the case that some banks may have lost money by being exposed to some crypto companies, but it could be argued that crypto has not had proper regulation throughout the years of its existence, allowing some bad actors to operate and exploit this space.

Trying to block crypto projects in order to punish and suppress the industry is not the best idea.

Read:Searches for NFT on Google rise 300%, surpassing searches for DeFi projects

The banking industry is already in dire straits and cutting off cryptocurrencies is not going to save it.

The crypto market as a whole is a small segment compared to the global economic market as the crypto market is worth around $1 trillion.

While the traditional finance industry holds hundreds of trillions in value, there are still a few whispers in Europe about the potential catastrophe of a full-blown financial meltdown.

Read also:

IMF blog highlights concerns about cryptocurrency

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