Concerns Over Europe’s Crypto Banking Sector
Elena Carletti, a prominent figure at UniCredit and the head of its board risk committee, has expressed deep concerns regarding Europe’s ability to manage a potential crisis in the crypto banking sector, especially in light of new rules under the Markets in Crypto-Assets (MiCA) framework. Speaking at a conference held at IESE Business School in Madrid, she contrasted Europe’s measures with the robust emergency responses seen in the United States in 2023, particularly during the collapse of Silicon Valley Bank (SVB) and Signature Bank.
Weaknesses in European Regulatory Framework
Carletti emphasised that the swift actions taken by US regulators, which included ensuring all deposits at these banks were protected, highlighted a significant weakness in Europe’s regulatory toolkit. She noted that the European Union’s existing deposit insurance scheme, which is limited to €100,000 per account, is ill-equipped to handle the risks posed by large reserves held by stablecoin issuers. This is particularly pertinent as MiCA mandates these issuers to maintain reserves in highly liquid assets like bank deposits and government bonds, inherently linking them to banking stability.
Impact of the SVB Crisis
The risks became starkly apparent during the March 2023 SVB crisis, when USDC, a stablecoin issued by Circle, reported that $3.3 billion of its reserves were tied up in the collapsed bank, leading to significant instability as its dollar peg faltered until US authorities stepped in with guarantees.
Engagement with Stablecoins
Carletti’s insights come at a time when European banks are increasingly engaging with stablecoins. UniCredit is actively involved in Qivalis, a consortium that is developing a MiCA-compliant euro stablecoin set to debut in late 2026. Furthermore, Banca Sella, another member of Qivalis, has recently secured approval from the Bank of Italy to provide crypto custody and transfer services under MiCA’s provisions for credit institutions.
Future of MiCA and Systemic Risks
As the full implementation of MiCA looms closer, with supervision of crypto asset service providers (CASPs), stablecoin issuers, and decentralized finance (DeFi) operations tightening by July 2026, industry leaders like Tether’s CEO Paolo Ardoino have voiced similar trepidations. Ardoino pointed out that MiCA’s requirement for a 60% uninsured cash reserve could further exacerbate systemic risks, resonating with Carletti’s warnings about the fragility of the current system.
