Published: 31.03.2022
Article reading time:
2 minutes.
The European Systemic Risk Board (ESRB) believes that the authorities will impose restrictions on banks to work with cryptocurrencies in order to avoid the collapse of the financial system.
The ESRB has published a report warning that the development of the crypto industry could have a detrimental effect on the EU financial system.
“The emergence of new institutions and the use of new financial products, some of which have quickly gained popularity (for example, crypto assets, stablecoins, and so on), may pose risks to financial stability,” the document says.
According to the authors of the report, European Union banks may face stricter restrictions on cryptocurrency activities in order to prevent overheating and uncontrolled growth of virtual assets that can turn the financial system upside down.
The European Systemic Risk Board has proposed that these severe restrictions extend beyond banking to other institutions, including new fintech players and large companies such as Meta and Google.
The ESRB has called for “quick adoption and implementation” of the EU’s Crypto Asset Markets Regulation (MiCA), which council members say will help manage financial stability risks.
The European Systemic Risk Board (ESRB), created in the aftermath of the 2008 crisis and led by European Central Bank President Christine Lagarde, is considering expanding the controls that supervisors can impose to protect the EU’s financial system. In addition to overseeing individual institutions, regulators can introduce “macroprudential” measures to limit larger problems. For example, to prevent banks from issuing mortgage loans that would be too large compared to the borrower’s salary.
Before the adoption of MiCA, EU legislators are introducing more and more rules that can slow down the development of the crypto industry in Europe. Recently, EU legislators introduced a provision in the Anti-Money Laundering (AML) bill that deprives unregistered cryptocurrency service providers of bank financing in Europe.
Source: Bits
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