New Measures Proposal for Cryptocurrencies from the European Union! If Accepted, This Will Be the First Time Such Strict Measures Have Been Taken.

European regulators signaled the EU's toughest stance on Bitcoin and other digital assets by proposing strict new capital requirements for insurers holding cryptocurrencies.

The European Insurance and Occupational Pensions Authority (Eiopa) has recommended that the European Commission impose a 100% capital requirement on insurers for all crypto assets.

This move aims to deter insurers from investing in digital assets as the U.S. takes steps to loosen restrictions on crypto assets for traditional financial institutions. Currently, most EU insurers allocate capital equivalent to 60% to 80% of their crypto assets, but the proposed rule will make full coverage mandatory and significantly increase the cost of holding digital assets.

Eiopa's proposal goes beyond cryptocurrencies like Bitcoin and Ethereum, targeting stablecoins pegged to fiat currencies and other tokenized assets supported by traditional investments such as debt or equity. This indicates that the regulator has imposed such serious capital requirements for any asset class held by insurers for the first time.

Despite the strict stance, the impact of the proposed rules is expected to be limited in the short term. According to Eiopa, European insurers held approximately 655 million Euros worth of crypto assets at the end of 2023, which was less than 0.01% of their total assets of 9.6 trillion Euros. The majority of these assets were concentrated in Luxembourg, indicating indirect exposure through investment funds rather than direct ownership.