Circle has submitted its response to the European Insurance and Occupational Pensions Authority's (EIOPA) consultation on technical advice for standard formula capital requirements for investments in crypto-assets.
Circle has submitted its response to the European Insurance and Occupational Pensions Authority's (EIOPA) consultation on technical advice for standard formula capital requirements for investments in crypto-assets. As the crypto ecosystem continues to evolve, ensuring that regulatory frameworks are both robust and innovation-friendly is crucial.
EIOPA’s current draft advice proposes a uniform 100% stress factor on all crypto-assets, a method that overlooks the varying risk profiles of different asset classes. Circle supports Policy Option 4, which emphasizes a nuanced approach, particularly for tokenized assets like electronic money tokens (EMTs) authorized under the Markets in Crypto-Assets Regulation (MiCA). EMTs, fully backed by high-quality liquid assets, present a significantly lower risk compared to other crypto-assets.
Circle's response highlights the importance of aligning EIOPA's advice with existing regulatory frameworks, such as the Capital Requirements Regulation (CRR). The CRR already incorporates a look-through approach for EMTs, a methodology that ensures proportionality and that MiCA authorized EMTs can be adopted by financial institutions in the insurance sector.
Circle remains committed to collaborating with global regulators to shape a secure and inclusive future for digital finance. Stay updated as we continue to engage in policy discussions that shape the industry's trajectory.
