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Manoj’s comments were published in Global Risk Regulator, 6 March 2023, and can be found here

Finance and regulation experts are startled at how much the EU is deviating from Basel guidelines in its latest banking reforms, raising fears of non-compliance with international banking standards.

Basel 3.1 is one step closer to fruition in the EU after the European Parliament’s Economic and Monetary Affairs committee (Econ) agreed its position on the final elements of Basel – the most recent set of international bank reforms – known as Basel 3.1.

In late January, Econ voted on adopting changes to the package of banking rules that banks in the bloc must adhere to – the Capital Requirements Regulation (CRR) and the Capital Requirements Directive (CRD) – to stay up-to-date with Basel III. The European Parliament said in a press release that MEPs agreed on the need to “faithfully implement” the Basel III reforms.

Manoj Mistry, managing director at international banking association IBOS, says: “Demanding stricter capital requirements for banks trading crypto for their clients or providing other crypto services will do nothing to prevent the criminal activity that plagues the sector.

“However, the announcement of tougher rules for banks will suggest to clients and investors that the sector is safer than before, and therefore encourage inflows into the crypto market, running the risk of far more serious consequences for the wider financial system when – not if – the next collapse occurs.”