The European Insurance coverage and Occupational Pensions Authority (EIOPA), which oversees the insurance coverage and occupational pensions sectors within the EU, recommends imposing stricter capital necessities for insurers with crypto holdings.
In a statement, the regulator says it suggested the European Fee to introduce a 100% capital requirement for digital belongings held by insurance coverage corporations.
The proposed rule will apply no matter how insurance coverage companies label their crypto holdings within the stability sheet or whether or not they have direct or oblique publicity to digital belongings
“The European Insurance coverage and Occupational Pensions Authority printed right this moment its technical recommendation to the European Fee, recommending {that a} one-to-one capital requirement be utilized persistently to all crypto holdings of EU (re)insurers.”
The regulator says capital necessities ought to seize the dangers related to crypto belongings, together with excessive value actions, market manipulation, lack of value transparency and low liquidity.
“EIOPA considers a 100% haircut in the usual method prudent and acceptable for these belongings in view of their inherent dangers and excessive volatility.”
EIOPA says insurance coverage corporations working within the area don’t but have important publicity to crypto. The regulator’s technical recommendation report says that within the final quarter of 2023, EU insurers invested solely €655 million ($708.68 million) within the nascent asset, which represents simply 0.0068% of their €9.6 trillion ($10.39 trillion) in whole belongings.
“Total, the investments of undertakings in crypto-assets are immaterial.”
In line with the Monetary Instances, EU insurers at the moment allocate capital equal to 60% to 80% of the worth of their crypto belongings.
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