Market participants are all very familiar with the slightly strained relationship between banks and crypto. In this sense, the EU has just intensified its examination of the links between traditional banks and crypto. The EBA, in particular, explores the potential risks and economic impacts in this era of revolutionary financial regulation.
“Crypto, a dark market”, according to the ABE investigation
The joint initiative of the EBA, ESRB and FSB, centered on the MiCA standard, represents a significant turning point in the understanding of the links between banks and crypto. According to José Manuel Campa, president of the ABE, this decision aims to highlight potential risks in “stress scenarios” between the banking and non-banking sectors (including crypto).
According to data from the Financial Stability Board (FSB), the total value of assets held by Non-Bank Financial Institutions (NBFIs) amounts to more than $200 trillion. Campa qualifies the NBFI sector (including crypto) is obscuredue to the diversity and inhomogeneity of the data.
The ABE is thus committed to assessing the exposures of bank balance sheets to the crypto sector. This detailed analysis aims to anticipate and mitigate potential contagion risks in an increasingly interconnected financial landscape.
EU regulation and balance
Although cautious, the EU’s approach to crypto regulation demonstrates a proactive desire to balance innovation and financial security. THE limits introduced last July demonstrate this commitment. This involves capping transactions at €1,000 for unverified crypto users and €7,000 for cash payments.
Damien CarĂŞme, French lawmaker leading Anti-Money Laundering (AML) negotiations, clarifies the position :
“We are absolutely not preventing crypto transactions. It’s just when identification is not possible.”
This approach seeks to increase transparency while avoiding excessive restrictions on legitimate crypto transactions.
As the EBA prepares for the adoption of the MiCA law, AFME highlights the importance of integrating DeFi into the regulatory framework. According to this organization, ignoring DeFi could lead to regulatory arbitrage compromising the effectiveness of future measures.
Through its approach, the EU therefore seeks to shape balanced regulation of crypto. File to follow…
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