If a crypto company starts acting like a bank, it should be regulated as such, which will not be easy, said Andrea Enria, president of the supervisory board of the European Central Bank (ECB), during an interview on Wednesday with four members of the Union. European. media.
The digital euro and private cryptocurrencies planned by the ECB are not a threat to the role of banks, Enria said. However, supervision of cryptocurrency companies could be more challenging than supervision of banks because certain services provided by the sector can “largely mimic the provision of bank-like services” in payments and decentralized finance ( DeFi).
“And here the difficulties are serious,” said Enria. “For us there will mainly be the question of deterritorialization, the fact that these entities sometimes do not have a precise headquarters.”
Binance, the world’s largest cryptocurrency exchange, which recently reached a landmark $4.3 billion settlement with the US government for serving local customers without proper approvals, operates globally without a headquarters. Revelations following the 2022 collapse of multibillion-dollar company FTX showed “a lot of opacity” within crypto companies.
“There is a problem of consolidation. It has been seen in the case of FTX that it is not possible to have a perspective of the business of the entire group and the risks that these entities assume,” said Enria.
The lack of an issuer in the case of popular cryptocurrencies like bitcoin (BTC), or the absence of a clear entity within DeFi projects also makes these elements difficult to oversee, he said.
“That will be the challenge for us more than for the banks. The issue will be to ensure that once someone engages in banking activity, it comes under the purview of banking regulation and supervision,” Enria said.
EU officials are facing questions about virtual assets as the bloc’s parliament considers legislative proposals for a digital euro, which is expected to challenge private cryptocurrencies as a means of payment.
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