European Union · CoinDesk
UniCredit signals Europe may struggle to contain crypto-bank crisis under MiCA rules
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Europe may struggle to contain a financial shock tied to crypto firms and banks because its crisis tools are more limited than those used in the U.S. during the 2023 banking turmoil, a senior official with European bank UniCredit said Thursday.
Key facts
- Carletti warned that Europe’s deposit guarantee system, which generally protects up to 100,000 euros ($116,500) per depositor per bank, may not be able to absorb similar stress if large stablecoin
- Circle, issuer of the USDC stablecoin, revealed that $3.3 billion of its reserves were held at the bank at the time of the crisis
- That link could have become a problem during the Silicon Valley Bank collapse in March 2023
- Elena Carletti, UniCredit’s deputy vice chair and head of the board’s risk committee, said European authorities may not be able to guarantee crypto-linked deposits in the same way U.S. regulators
Summary
Europe lacks crisis tools used by the U.S. to contain crypto-bank shocks, raising concerns about its ability to handle future financial turmoil. EU deposit insurance (up to €100,000) may not absorb stress from large stablecoin reserve accounts, unlike the full protection offered by U.S. regulators. MiCA forces stablecoin providers to align with banks, but without extended deposit insurance, creating a "double weakness" in the European financial system. Elena Carletti, UniCredit’s deputy vice chair and head of the board’s risk committee, said European authorities may not be able to guarantee crypto-linked deposits in the same way U.S. regulators did after the collapses of Silicon Valley Bank and Signature Bank, Reuters reported.