A European regulator has suggested that insurance companies should keep enough funds to match the full value of any crypto assets they hold.
This idea comes from the European Insurance and Occupational Pensions Authority (EIOPA), which shared its proposal with the European Commission on March 27. The aim is to reduce the risk to policyholders, as digital assets are known for their unstable prices.
Unlike other types of investments, such as real estate or company shares, crypto assets would need to be fully backed under this plan.
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EIOPA put forward four possible options for handling crypto risks. The first option was to make no changes. The second would apply an 80% risk level, which means insurers would need to keep capital equal to 80% of their crypto holdings. A third option raises that to 100%. The final option would look at the risks of tokenized assets broadly.
If adopted, the proposal would introduce stricter rules for crypto than for traditional investments. Under current EU regulations, real estate holdings by insurers are backed at 25%, while stocks fall between 39% and 49%. A 100% rate would set a much higher bar for crypto.
Still, EIOPA believes this would not lead to higher costs for people with insurance. The regulator said that the added requirement would improve protection without making insurance more expensive.
Meanwhile, Lisa Gordon, chair of investment bank Cavendish, recently suggested taxing crypto and reducing stock fees. Why? Read the full story.
Having completed a Master’s degree in Economics, Politics, and Cultures of the East Asia region, Aaron has written scientific papers analyzing the differences between Western and Collective forms of capitalism in the post-World War II era.With close to a decade of experience in the FinTech industry, Aaron understands all of the biggest issues and struggles that crypto enthusiasts face. He’s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain & Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.
