The European Banking Authority (EBA) has finalized draft rules requiring banks to hold significantly more capital against so-called “unbacked” cryptocurrencies like Bitcoin and Ether.

In its final draft of regulatory technical standards released on Tuesday, the EBA said the rules aim to “address implementation aspects and will ensure harmonisation of the capital requirements on crypto-asset exposures by institutions across the EU.” The framework applies to European Union-based banks holding crypto assets on their balance sheets.

Once the final draft goes to the European Commission, Brussels will have up to three months to decide whether to endorse it as is or with amendments, or send it back for redrafting. After endorsement, the bill would become a delegated regulation and be forwarded to the European Parliament and the Council, with a three-month objection window extendable to six months.

According to the accompanying documentation, digital assets in group 2 (a and b) are subject to “a general 1,250%” risk weight. Group 2b refers to “other” crypto assets, including unbacked ones such as Bitcoin (BTC). Group 2a refers to a subcategory of the same assets that meet the Bank for International Settlements’ hedging and netting criteria.

Group 1 b refers to so-called asset-referenced tokens tied to traditional financial instruments. This group is subject to a 250% risk weight.

Those risk weights were introduced as part of the Capital Requirements Regulation (CRR III) and took effect in July 2024.

EBA finalizes strict crypto rules

The latest EBA draft adds the technical elements needed to calculate and aggregate crypto exposures, such as credit-risk, market-risk and counterparty-risk modeling. It also introduces strict separation between assets, meaning Bitcoin and Ether (ETH) cannot be offset against each other.

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If neither the European Parliament nor the Council objects, the draft will come into effect within 20 days of its publication in the Official Journal of the EU.

The rules are expected to directly affect European banks already holding crypto on their balance sheets. Italian bank Intesa Sanpaolo, which bought 1 million euros worth of Bitcoin in January, would need to hold 12.5 million euros in capital against that position under the draft framework.

Fintech firm Revolut is unlikely to be affected by the change. The bank’s crypto services are off-balance-sheet and managed by its non-banking arm, Revolut Digital Assets Europe Ltd.

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Europe swims against the tide

The EBA’s stance contrasts sharply with the broader direction of global regulators moving toward embracing crypto within existing financial frameworks.

In late March, the US Federal Deposit Insurance Corporation (FDIC) stated in a letter that institutions under its oversight, including banks, can now engage in crypto-related activities without prior approval.

In April, Switzerland passed amendments to its DLT Act, enabling banks to custody tokenized securities and offer guarantees for stablecoin issuers under a clear legal framework.

Recent reports also suggest US President Donald Trump is planning to sign an executive order directing banking regulators to investigate claims of debanking made by the cryptocurrency sector and conservatives.

The US banking sector is already taking notice, with JPMorgan Chase reportedly exploring crypto-backed loans, signaling a potential shift in how US banks view crypto assets.

The new EU capital rules could limit bank participation in the growing digital asset market, especially as decentralized finance and tokenization continue to expand into mainstream financial services.

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