The European Union’s insurance authority has proposed a rule mandating insurance firms to maintain capital equal to the value of their crypto holdings, citing the high volatility and risks associated with crypto assets. This proposal, made by the European Insurance and Occupational Pensions Authority (EIOPA) in a Technical Advice report, would impose a stricter standard than those for traditional asset classes, which are subject to lower capital requirements. EIOPA recommends a 100% capital charge, emphasizing that this measure would help protect policyholders against the potential total loss in value of crypto investments. The authority suggested four options for the European Commission, with option three—100% stress level—considered the most prudent. EIOPA pointed out that while the current share of crypto-related exposures in insurance is minimal, the inherent risks of these assets warrant stringent measures. Luxembourg and Sweden are expected to be most affected by this rule, which could result in significant adjustments for insurers operating in those countries.

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