The European Insurance and Occupational Pensions Authority (EIOPA) has proposed a new requirement: insurers must hold capital fully equivalent to the value of their crypto asset investments.

EIOPA aims to protect clients from risks associated with the volatility of cryptocurrencies such as Bitcoin and Ethereum.

The proposal was presented in a technical report to the European Commission. Among the options considered, the regulator deemed “full 100% coverage of crypto assets” as the most suitable. The previous idea of 80% coverage was rejected, as EIOPA argued that it failed to account for the high risk of complete cryptocurrency devaluation.

This requirement will be stricter than those for other asset classes. For instance, equity and real estate investments in the EU require capital coverage of 39-49% and 25%, respectively.

However, the share of crypto assets in the insurance and reinsurance market remains extremely low, totaling approximately €655 million—just 0.0068% of all market operations in Europe. Most funds involving crypto assets are linked to mutual investments.

The new requirement is expected to have the greatest impact on insurers in Luxembourg and Sweden, which collectively hold 69% and 21% of the sector’s crypto investments, respectively.

Notably, on February 25, ECB advisor Jürgen Schaaf stated that Bitcoin is not suitable for national government reserves.