The European Insurance and Occupational Pensions Authority has made a bold proposal, recommending a one-to-one capital requirement for all crypto asset holdings by EU insurers and reinsurers. In its to the European Commission on Thursday 27 March 2025, the regulator called for a 100% capital charge, or “100% haircut,” to be applied to these digital assets. The proposal underscores the growing concern over the extreme risks and unpredictable volatility associated with crypto investments.

Regulatory gaps

As crypto assets continue to gain traction in the financial world, their regulatory treatment remains in flux. While the capital requirements regulation (CRR) and the markets in crypto-assets regulation (Mica) provide some transitional prudential measures for crypto assets, the European Union’s regulatory framework for insurers and reinsurers has yet to offer specific guidance on these assets. This “regulatory gap” has left (re)insurers to classify their crypto holdings in an inconsistent and often arbitrary manner, raising serious concerns over the accuracy of their risk assessments.

Eiopa’s in-depth empirical analysis of historical crypto asset data painted a worrying picture. The authority found that current capital weight options, including the 80% stress level applied to intangible assets, fail to adequately capture the extreme risks posed by crypto exposures. According to Eiopa, the risks associated with these volatile assets have been significantly underestimated under the current regulatory framework, leaving insurers potentially exposed to greater financial instability.

100% capital requirement

In response to these findings, Eiopa has proposed a sweeping policy change aimed at addressing the growing concerns over the treatment of crypto assets. The authority is advocating for a blanket 100% capital requirement across all crypto holdings of insurers and reinsurers. This uniform approach would apply regardless of whether the exposure is direct or indirect, or how it is accounted for on balance sheets.

Eiopa argued that this proposal would provide an effective way to ensure that the high risks associated with crypto investments are adequately reflected in capital requirements, without creating unnecessary complexity. Notably, the authority pointed out that insurers' investments in crypto assets remain relatively modest at this stage, meaning the impact of such a measure would be limited and proportionate.

While Eiopa’s proposal aims to address immediate concerns, the authority also cautioned that a broader adoption of crypto assets in the financial system could necessitate further regulatory adjustments.

The 21-page policy analysis and recommendation is available .