New EU Regulations Grant Banks a Regulatory Edge in Tokenized Assets, Potentially Accelerating Tokenization in Europe

According to Jinse Finance, legislation passed by the European Union last year has created significant regulatory advantages for banks in tokenizing traditional assets, making their handling more flexible than in most regions worldwide. This week, the European Banking Authority (EBA) released its final technical standards, largely following the Basel Committee on Banking Supervision (BCBS) guidelines and primarily applying to cryptocurrencies. However, EU legislation has overturned the conservative approach to tokenized traditional assets, explicitly treating them on par with traditional assets without any additional conditions. EU banks can handle tokenized securities on any type of blockchain without extra capital requirements, whereas banks in other regions that follow the Basel Committee guidelines must apply a maximum 1250% risk weight to similar assets held on permissionless networks. This regulatory difference also extends to the stablecoin sector, giving Europe a unique advantage in institutional tokenization and the digitalization of traditional financial instruments.