EU Approves Banks to Hold 2% of Capital in Bitcoin

So, according to Reuters, the Economic Affairs Committee of the European Parliament just gave the green light to a bill that sets up the last phase of the Basel-III global banking capital rules, which will kick in January 2025. This is just the initial step though. They still need to get the thumbs up from the European Parliament in the next session. But it seems like lawmakers are really using the recent turmoil in the crypto market, especially the events of the last few months, as a strong case for pushing these rules through.

The Bitcoinist article headline makes it sound like a great news, but if I understand this right, they are only imposing restrictions on the maximum banks are allowed to hold (and introducing free capital/crypto ratio requirement). This suggests that the banks were already allowed (or not prohibited) from holding crypto, with the "1%" being only a recommendation. That being said, I don't recall of any major bank having any cryptos on their balance sheets.

The good news here (as has been seen before) might be that banks can class cryptocurrencies as currency reserves and not assets and that's quite surprising imo anyway (things like stocks, gold or oil can't be iirc). The 2% is small though and I wonder what bank will do that if they could just incorporate another company to handle crypto investments and invest in that with the 97% of virtual funds they have (rather than using the 0-3% of cash reserves they actually hold).

We will have to see how this develops. I remember that this cycle was called the institutional adoption cycle, but it is being a bit decaffeinated by the whole leverage explosion, and except for the enthusiastic buying of MSTR, we haven't achieved massive institutional adoption either. With news like this, I think we will reach it, but maybe it will take another cycle or two, where it will be more common for companies to hold part of their reserves in Bitcoin, or even banks, rather than in gold or other assets.