The European Banking Authority (EBA) today published its final draft Regulatory Technical Standards (RTS) which specify the technical elements necessary for institutions to calculate and aggregate crypto-asset exposures in relation to the prudential treatment of such exposures. The RTS address implementation aspects and will ensure harmonisation of the capital requirements on crypto-asset exposures by institutions across the EU.

What’s this about?
These RTS aim to create consistent rules across the EU for how institutions handle capital requirements related to crypto assets.

Key points:

The rules cover credit risk, market risk, counterparty risk, and valuation risks for different types of crypto assets:

• Asset-referenced tokens (ARTs) – linked to traditional assets or crypto-assets
• Unbacked crypto-assets – like Bitcoin

They provide technical details on:

• How to net and aggregate positions
• Rules for hedging
• Formulas for calculating exposure values

The RTS are aligned with Basel standards and take into account the Markets in Crypto-Assets Regulation (MiCA).

After the public consultation:

• The EBA removed the requirement for prudent valuation on fair-value exposures.
• Added clear rules on how to combine long and short positions when calculating exposure limits.

These transitional rules under CRR3 allow banks to engage in crypto markets while a permanent framework is developed.

Learn more at: eba.europa.eu