The EU’s insurance watchdog, EIOPA, wants tougher rules for European insurance companies that own cryptocurrency.
100% Capital Requirement Proposed
EIOPA is recommending that the European Commission force insurers to set aside 100% of the value of their crypto holdings as capital. This applies no matter how the crypto is listed on the company’s books, or whether the exposure is direct or indirect. The goal is to cover the risks involved with crypto, like wild price swings, manipulation, and lack of transparency. EIOPA considers this a safe approach given crypto’s volatility.
Small Crypto Exposure So Far
Currently, EU insurers have a tiny amount of money in crypto – about €655 million out of a total of €9.6 trillion in assets. EIOPA says this is insignificant. Right now, insurers are only setting aside 60% to 80% of their crypto assets as capital.
Looking Ahead
This proposed change would significantly increase the capital requirements for insurers holding crypto assets. The move reflects the EU’s cautious approach to the relatively new and volatile cryptocurrency market.
