EU banking watchdog investigating links between banks and cryptocurrency companies
The European Banking Authority (EBA) is proposing a test to see whether tensions among non-banking financial institutions (NBFIs), including those involved in cryptocurrencies, will have an impact on lenders.
According to the Financial Times, EBA President José Manuel Campa expressed concern about the need to “deepen links between banks and other financial companies.”
“We must do more and we will do more. We need to understand the entire underlying chain of NBFIs.”
Jose Manuel Campa (EBA President)
The EBA has already taken several steps to address the role cryptocurrencies may play in straining the system. Last November, regulators published draft rules on liquidity and capital requirements for stablecoin issuers under the EU’s new Markets for Cryptocurrency Assets (MiCA) regulations.
The EBA also requires individuals with more than a 10% stake in cryptocurrency companies to be screened for convictions or sanctions, and requires cryptocurrency companies to monitor customers using privacy coins or self-hosted wallets to identify potential money laundering. I proposed a rule telling me to do it.
EBA’s latest initiative is directly tied to last spring’s adoption of MiCA. All 27 EU member states unanimously supported this bill. This document introduces institutional regulation of cryptocurrency issuance and establishes a unified legal framework for cryptocurrency companies in the European Union. The EU began work on a series of regulatory bills starting in 2020. The law will officially come into effect 20 days after its promulgation, but rules for cryptocurrency exchanges will begin to apply in December 2024.