{"id":125970,"date":"2025-03-28T03:16:43","date_gmt":"2025-03-28T03:16:43","guid":{"rendered":"http:\/\/cryptospotters.net\/?p=125970"},"modified":"2025-03-28T03:16:43","modified_gmt":"2025-03-28T03:16:43","slug":"eu-watchdog-wants-insurers-crypto-holdings-100-covered-citing-volatility","status":"publish","type":"post","link":"http:\/\/cryptospotters.net\/?p=125970","title":{"rendered":"EU watchdog wants insurers\u2019 crypto holdings 100% covered, citing volatility"},"content":{"rendered":"

Source: Cointelegraph.com NewsThe European Union\u2019s insurance authority has proposed a blanket rule that would mandate insurance firms to maintain capital equal to the value of their crypto holdings as part of a measure to mitigate risks for policyholders.
\nThe new proposal \u2014 made by the European Insurance and Occupational Pensions Authority in a Technical Advice report to the European Commission on March 27 \u2014 would set a far stricter standard than other asset classes, such as stocks and real estate, which don\u2019t even need to be half-backed.
\n\u201cEIOPA considers a 100% haircut in the standard formula prudent and appropriate for these assets in view of their inherent risks and high volatility,\u201d it said in a separate statement.
\nSuch a measure would fill a regulatory gap between the Capital Requirements Regulation and Markets in Crypto-Assets Regulation (MiCA), EIOPA said, noting that the European Union\u2019s regulatory framework for insurers currently lacks specific provisions on crypto assets.
\nCircle argued in January that a blanket 100% stress factor on crypto assets didn\u2019t account for lower-risk stablecoins. Source: Circle EIOPA outlined four options for the European Commission to consider \u2014 one: make no changes; two: mandate an 80% \u201cstress level\u201d to crypto assets; and three: mandate a 100% stress level to crypto asset.
\nThe stress level percentages determine how much capital firms need to hold to stay solvent.
\nThe fourth option called on the European Commission to consider the risks of tokenized assets more broadly.
\nEIOPA said option three would be the most appropriate option.
\n\u201cAn 80% stress to the value of crypto-asset exposures does not appear sufficiently prudent,\u201d whereas \u201ca 100% stress is more appropriate and aligns with one of the approaches to the transitional treatment of crypto-assets under CRR,\u201d EIOPA said.
\nThe 100% stress refers to the assumption that the crypto asset prices could fall by 100% and that diversification \u2014 spreading the risk across different assets \u2014 wouldn\u2019t not reduce this stress. EIOPA pointed out that Bitcoin (BTC) and Ether (ETH) have fallen 82% and 91%, respectively, in the past.
\nA 100% capital charge for crypto assets would reflect a far stricter approach compared to stocks, which range between 39% and 49%, and real estate, which incurs a 25% capital charge, according to solvency capital requirements laid out in the Commission Delegated Regulation 2015\/35.
\nEIOPA said a 100% capital charge for crypto asset-related (re)insurance undertakings shouldn\u2019t be \u201coverly burdensome\u201d and that there would be no material costs for policyholders.
\n\u201cThe capital requirements would fully capture the risk of crypto-asset with a positive impact on policyholder protection in case there are material exposures in the future.\u201d
\nRelated: Tabit offers USD insurance policies backed by Bitcoin regulatory capital
\nEIOPA acknowledged that the share of crypto-asset (re)insurance undertakings accounts for just 655 million euros or 0.0068% of all undertakings in Europe \u2014 even referring to it as \u201cimmaterial.\u201d
\n\u201cAt the same time crypto assets are high risk investments which may result in total loss of value,\u201d EIOPA said, explaining why it recommends option three.
\nLuxembourg and Sweden could be hit hardest by the proposed rule
\nInsurers in Luxembourg and Sweden are likely to be the most affected, according to a Q4 2023 report cited by EIOPA, which found that these two countries accounted for 69% and 21% of all crypto asset-related exposures among (re)insurance undertakings.
\nIreland, Denmark and Liechtenstein also accounted for 3.4%, 1.4% and 1.2% of the undertakings.\u00a0
\nMost of these undertakings are structured within funds, such as exchange-traded funds, and held on behalf of unit-linked policyholders, EIOPA noted.
\nSplit of crypto-asset exposure proxy per European country in Q4 2023. Source: EIOPAEIOPA, however, acknowledged that a broader adoption of crypto assets in the future may require a more \u201cdifferentiated approach.\u201d
\nMagazine: Crypto fans are obsessed with longevity and biohacking: Here\u2019s whyRead More<\/a><\/p>","protected":false},"excerpt":{"rendered":"

Source: Cointelegraph.com NewsThe European Union\u2019s insurance authority has proposed a blanket rule that would mandate insurance firms to maintain capital equal to the value of their crypto holdings as part… <\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[5],"tags":[],"_links":{"self":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/posts\/125970"}],"collection":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=125970"}],"version-history":[{"count":0,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/posts\/125970\/revisions"}],"wp:attachment":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=125970"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=125970"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=125970"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}