The European Green Party has submitted its amendments to legislation that increase the capital requirements for banks using cryptocurrencies.
European Union (EU) Green Party MP Ville Niinistö has proposed amendments to the Financial Services Act that would restrict European banks using cryptocurrencies.
The document states that crypto assets that are considered excessively volatile or risky and fall under class 2 will be rated as “cautious” as possible. This essentially means that they will not be able to lend based on digital assets.
“The total share of class 2 crypto assets should not exceed 1% of the capital of Tier 1 institutions,” the proposal says.
Class 1 crypto assets, which are considered less risky and include regulated stablecoins and securities using distributed ledger technology, will receive more flexible capital requirements and will not have restrictions.
The proposal was supported by a Finnish member of the European Parliament. However, Niinista’s plan will need support from other lawmakers in the parliament’s Committee on Economic and Monetary Affairs – a hearing on the matter due in December – and from EU governments.
In June, Presight Capital cryptocurrency expert Patrick Hansen warned that the regulator intends to increase oversight of cryptocurrency mining on PoW, DeFi and stablecoins.