By Hugh Jones

LONDON (Reuters) – European Union lawmakers backed a bill on Tuesday to introduce the latest part of post-financial rules for global banking capital, adding “prohibitive” requirements to cover risks from crypto-assets.

The European Parliament’s Economic Affairs Committee approved a bill to introduce Basel III capital rules from January 2025, although it supported several temporary derogations to give banks more time to adapt.

The United States, Great Britain and other countries are taking similar steps, but the committee used the bill to introduce new elements, including requiring banks to have enough capital to fully cover their holdings of crypto assets.

“Banks will have to hold a euro of equity for every euro they hold in crypto,” said Markus Ferber, a center-right German member of the committee.

The move, a temporary measure pending further adoption of EU legislation, is in line with recommendations from global banking regulators.

“Such prohibitive capital requirements will help prevent instability in the crypto world from spilling over into the financial system,” Ferber said.

The Association of Financial Markets in Europe (AFME), an industry body, said the bill does not contain a definition of crypto-assets and could eventually apply to tokenized securities as well.

EU countries have already approved their version of the bill, and lawmakers will now discuss the final text with member states, with further adjustments expected.

Foreign banks operating through branches in the EU will closely monitor the negotiations.

EU countries have taken a more lenient approach to when foreign banks serving clients in the bloc must open a branch or convert a branch into a more capitalized subsidiary, with EU lawmakers taking a tougher line on Tuesday.

The EU is seeking to create “strategic autonomy” in capital markets as it faces a rival financial center on its doorstep after Brexit.

AFME said it would be important to avoid “significant negative impacts” from tightening EU access to international markets and cross-border services.

(Reporting by Hugh Jones; Editing by Ian Harvey)

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