UniCredit warns Europe may struggle to contain crypto-bank crisis under MiCA rules
- European authorities lack the ability to guarantee crypto-linked deposits like U.S. regulators did during recent banking crises.
- Elena Carletti of UniCredit highlighted that the U.S. protected all deposits, including those of stablecoin issuers, stabilizing markets.
- The EU’s Markets in Crypto-Assets regulation (MiCA) requires stablecoin reserves to be held in liquid assets such as bank deposits.
- Circle disclosed that $3.3 billion of its USDC reserves were at Silicon Valley Bank during its collapse, causing a temporary loss of the dollar peg.
- Europe’s deposit guarantee system protects up to €100,000 ($116,500) per depositor, which may not suffice under stress from large stablecoin accounts.
Carletti warned that Europe’s limited deposit insurance could lead to vulnerabilities for stablecoin providers linked with banks, especially if large reserves face pressure. The situation highlights potential weaknesses in Europe’s financial safeguards compared to the U.S.
With a €100,000 limit on deposit guarantees, European systems may struggle to manage risks associated with significant stablecoin reserve accounts during crises similar to those faced by U.S. banks recently.
