The European Insurance and Occupational Pensions Authority (EIOPA) published technical advice to the European Commission recommending a consistent one-to-one capital requirement for all crypto asset holdings by EU (re)insurers. Under the Solvency II standard formula, EIOPA considers a 100% haircut prudent given crypto assets’ inherent risks and high volatility. The advice responds to the absence of specific Solvency II provisions on crypto assets, which has led to inconsistent classification practices and concerns over risk sensitivity and prudence. EIOPA’s empirical analysis of historical crypto data indicates that existing capital weight options, including the 80% stress level applied to intangible assets, underestimate crypto-related risks; it therefore proposes a blanket 100% capital requirement irrespective of balance sheet treatment and whether exposures are direct or indirect, aiming to avoid additional complexity or reporting requirements while crypto investments remain modest. The European Commission will consider EIOPA’s advice as part of its review of Solvency II level 2 provisions, and EIOPA notes the treatment should be revisited in the future if broader crypto adoption warrants a more differentiated approach.
European Insurance and Occupational Pensions Authority 2025-03-27
European Insurance and Occupational Pensions Authority advises 100% capital charge for EU insurers’ crypto asset holdings
The European Insurance and Occupational Pensions Authority (EIOPA) advised the European Commission to implement a consistent 100% capital requirement for all crypto asset holdings by EU (re)insurers under the Solvency II standard formula. This recommendation addresses the lack of specific Solvency II provisions on crypto assets and aims to mitigate risks associated with their volatility. EIOPA suggests revisiting this approach if crypto adoption significantly increases.