Banks Don’t Need Extra Crypto Protections Yet, EU Regulator Says

Banks Don’t Need Extra Crypto Protections Yet, EU Regulator Says

The European Banking Authority has stated that it will start to monitor cryptocurrency activities and spot new financial risks in the market. It also stated that banks don’t need to increase their current protections against crypto-related activities.

The EBA recently revealed that it will be watching cryptocurrencies like Bitcoin and Ethereum over the course of the next year. It plans to do this in order to spot any new financial risks that might arise due to these digital currencies. The agency opened

Banks’ exposures to crypto aren’t yet big enough to warrant extra protections designed to limit risks to the overall economy, the European Banking Authority said.

According to the Paris-based watchdog, crypto markets are too small and their regulation too inconsistent for proper development.

“It is not currently possible to accurately quantify the banks’ aggregate exposure to crypto-assets, as this market is still in its early stages of development and it is highly fragmented, with a large number of small players operating in different jurisdictions with varying levels of regulatory oversight,” the EBA said.

“The EBA considers it premature to introduce new macroeconomic tools to address the systemic aspects of these risks at this stage,” the EBA said. “The EBA emphasizes the need for monitoring of the crypto-asset sector, in particular identifying old and new mechanisms, vulnerabilities and risks that can make crypto-assets a source of systemic risk or threat to financial stability.”

Macroprudential policy gives powers to ban banks from overexposure to protect the banks from particular sectors if there are concerns activities in that sector could be a wider impact on the economy.

In its report, the EBA said that currently there are no widespread risks to financial stability from crypto assets, but warned that the situation could change.

“The EBA will continue to closely monitor developments in the crypto-asset sector and is ready to assess any new macroeconomic risks that might emerge,” the EBA said.

Although banks may not need extra protections from crypto assets yet, many financial regulators do see them as a potential source of systemic risk. The European Banking Authority (EBA) issued a report last month warning that crypto assets could pose a threat to financial stability if overexposed by banks.

Martin K Verified

I am a bitcoin and crypto currency writer. I also work as a professional trader, and I have experience with stock trading and bitcoin trading. In my work, I aim to provide clear and concise information that helps people understand these complex topics.

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