EIOPA said a 100% capital charge for crypto asset-related (re)insurance undertakings shouldn’t be “overly burdensome” and that there would be no material costs for policyholders.“The 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.”Related: Tabit offers USD insurance policies backed by Bitcoin regulatory capitalEIOPA acknowledged that the share of crypto-asset (re)insurance undertakings accounts for just 655 million euros or 0.0068% of all undertakings in Europe — even referring to it as “immaterial.”“At the same time crypto assets are high risk investments which may result in total loss of value,” EIOPA said, explaining why it recommends option three.
The new proposal — made by the European Insurance and Occupational Pensions Authority in a Technical Advice report to the European Commission on March 27 — would set a far stricter standard than other asset classes, such as stocks and real estate, which don’t even need to be half-backed.“EIOPA considers a 100% haircut in the standard formula prudent and appropriate for these assets in view of their inherent risks and high volatility,” it said in a separate statement.
Source: Circle EIOPA outlined four options for the European Commission to consider — one: make no changes; two: mandate an 80% “stress level” to crypto assets; and three: mandate a 100% stress level to crypto asset.
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Author / Journalist: Cointelegraph by Brayden Lindrea
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