What to know:
- 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.
A UniCredit official warned Thursday that Europe might have a harder time managing a financial crisis involving crypto companies and banks than the U.S. did in 2023, because Europe’s financial safety nets aren’t as strong.
According to Reuters, Elena Carletti, a key leader at UniCredit, has stated that European authorities might not be able to protect crypto deposits as effectively as U.S. regulators did following the failures of Silicon Valley Bank and Signature Bank.
At a banking conference in Madrid organized by IESE Business School, Carletti explained that the U.S. choice to guarantee all deposits – even those belonging to stablecoin companies – played a key role in calming down the cryptocurrency markets during the recent crisis.
“The same decision cannot be easily taken in Europe,” Carletti said.
These statements arrive as new European Union regulations, called MiCA, are making stablecoin companies more similar to traditional banks. The rules state that some stablecoin reserves must be kept in easily accessible forms like bank accounts and government bonds.
The connection between Circle, the company behind the USDC stablecoin, and Silicon Valley Bank caused concern when the bank failed in March 2023. Circle had $3.3 billion of its reserves stored at the bank, and when the bank collapsed, investors quickly tried to exchange their USDC tokens for dollars, causing the stablecoin’s value to temporarily drop below one dollar.
After SVB and Signature Bank failed, U.S. regulators stepped in to protect all depositors, even those with accounts exceeding the standard insurance coverage. This move helped calm investors and stabilize the cryptocurrency market.
Carletti cautioned that Europe’s system for protecting bank deposits – which usually covers up to 100,000 euros (about $116,500) per person, per bank – might not be strong enough to handle a crisis if large amounts of money held in stablecoins face problems.
She explained that we’re essentially pushing stablecoin and crypto companies to work with traditional banks, but without offering the same protections like deposit insurance. She believes this creates a significant vulnerability, essentially a double weakness.
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2026-05-28 19:56