EU lawmakers want to restrict banks from using cryptocurrencies

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The European Green Party has unveiled its amendments to the legislation, which increase thecapital requirements for banks using cryptocurrencies.

European Union (EU) Green Party MP Ville Niinistö has proposed amendments to the Financial Services Act that would limit theEuropean banks using cryptocurrencies. 

The document states that crypto assets that are considered to be excessively volatile or risky and fall under theIn essence, this means that they will not be able tolend based on digital assets.

"The total share of Class 2 crypto assets should not exceed 1% ofcapital of first-tier institutions," the proposal says.

Class 1 crypto assets, which are considered less risky and include regulated stablecoins and securities that use distributed ledger technology, will receivemore flexible capital requirements and will have no limitations.

However, Niinistö's plan will need support from other lawmakers on the parliament's Economic and Monetary Affairs Committee, which is due to hold a hearing in December, and from EU governments.

In June, Patrick Hansen, a cryptocurrency expert at Presight Capital, warned that the regulatorintends to strengthen supervision over cryptocurrency mining on PoW, DeFi, and stablecoins.