UniCredit’s warning comes as regulators worldwide tighten scrutiny of crypto markets and of the banking sector’s exposure.
A senior UniCredit executive has warned that Europe may be more vulnerable to future crypto-related banking crises than the United States, highlighting growing concerns over the deepening connection between digital assets and the traditional financial system.
Elena Carletti, deputy vice chair of Italian banking giant UniCredit and head of the board’s risk committee, said Europe could struggle to respond to a banking shock similar to the 2023 Silicon Valley Bank (SVB) collapse, which exposed the financial system’s growing ties to crypto firms and stablecoins.
Her comments come as regulators worldwide increase scrutiny of digital assets, stablecoin reserves, and banks’ exposure to crypto-linked businesses.
Why The SVB Collapse Still Matters To Crypto Markets
The collapse of Silicon Valley Bank in 2023 triggered major disruption across both the banking sector and cryptocurrency markets.
SVB held deposits linked to several crypto companies, including reserves backing stablecoins and digital assets pegged to traditional currencies such as the US dollar.
When the bank failed, fears quickly spread across crypto markets. One major stablecoin temporarily lost its dollar peg, triggering panic withdrawals and broader concerns about liquidity across the financial system.
US authorities later invoked a “systemic risk” exception, guaranteeing all deposits at the failed banks, including deposits connected to crypto firms. The intervention helped stabilize markets and prevent wider contagion.
According to Carletti, Europe may not have the same flexibility.
“The same decision cannot be easily taken in Europe,” she said during a banking conference organized by Madrid’s IESE Business School.
Why Stablecoins Are Becoming A Major Regulatory Concern
Stablecoins have become one of the biggest focus areas for regulators because they act as a bridge between crypto markets and mainstream finance.
Unlike highly volatile cryptocurrencies, stablecoins are designed to maintain a fixed value by being backed with reserves such as:
- Bank deposits
- Government bonds
- Low-risk liquid assets
This structure ties stablecoin issuers directly to the banking system.
Under the European Union’s Markets in Crypto-Assets regulation, commonly known as MiCA, issuers of stablecoins, classified as electronic money tokens (EMTs), are required to hold reserves in low-risk financial assets or bank deposits.
While regulators see this as a way to improve transparency and stability, Carletti warned that it also creates a new layer of systemic vulnerability.
UniCredit Sees A “Double Weakness” In Europe’s System
According to Carletti, Europe’s current framework may unintentionally increase risk by strengthening the relationship between crypto firms and banks without offering the same crisis-response flexibility seen in the United States.
“That means we are forcing a certain alliance of stablecoin and crypto providers with the banking sector without the possibility of extending insurance in the same way,” she said.
“To me, that is a double form of weakness.”
Her warning reflects a growing debate inside global financial institutions over whether stablecoins could become a transmission channel for future financial instability.
If a major stablecoin issuer or crypto-linked bank faced sudden redemptions during market stress, regulators could face difficult decisions around deposit guarantees, liquidity support, and systemic risk containment.
Europe’s Crypto Rules Face A Real-World Stress Test
The European Union has positioned itself as one of the world’s most proactive regulators of digital assets through MiCA, which came into force to create a unified framework for crypto regulation across member states.
The rules aim to improve consumer protection, increase transparency, and reduce risks linked to unregulated crypto activity.
But critics argue that regulation alone may not be enough if crypto exposure inside the banking sector continues expanding faster than crisis-management mechanisms.
Carletti’s comments suggest that Europe may still face structural challenges in the event of a real financial shock involving stablecoins or crypto-linked deposits.
The warning also reflects a broader concern within global finance: digital assets are no longer isolated from traditional banking systems. As crypto becomes increasingly integrated with mainstream finance, future crises may spread faster and become harder to contain.
For regulators, the question is no longer whether crypto and banking are connected. The question is whether the system is fully prepared for what happens when those connections come under pressure.
Source: KT
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The collapse of SVB rattled crypto markets as it held deposits backing some crypto firms, destabilising a major stablecoin and sparking a wave of redemptions.
Photo: AFP file
