UniCredit’s Deputy Vice Chair, Elena Carletti, has raised concerns that Europe may face significant hurdles in responding to risks arising from the intricate links between crypto assets and traditional banks. Carletti, who also heads the board’s risk committee for the prominent Italian financial institution UniCredit, suggested Europe might struggle to contain damage in the way U.S. authorities did during the 2023 Silicon Valley Bank (SVB) crisis. UniCredit is a pan-European commercial bank headquartered in Milan, Italy. It offers a broad range of banking and financial services to individuals, businesses, and corporations across its network.
The collapse of SVB last year sent tremors through crypto markets, given its holdings of deposits backing several crypto firms. This destabilised a major stablecoin and triggered a wave of redemptions, with the shockwave ultimately contributing to the failure of Signature Bank. In response, U.S. authorities invoked a “systemic risk” exception, guaranteeing all deposits, including those belonging to crypto firms, thereby helping to stabilise markets. Carletti noted at a banking conference, “The coverage and protection… was given to all deposits, including stablecoin companies, and that also allowed to maintain the stability of the stablecoin.”
However, Carletti cautioned that a similar blanket protection for crypto-related deposits could not be easily extended in Europe. Stablecoins, digital assets pegged to traditional currencies and backed by deposits or government bonds, represent a key regulatory focus due to their connections to mainstream finance. The European Union’s MiCA regulation on digital assets mandates that issuers of stablecoins, specifically electronic money tokens (EMTs), must hold reserves as bank deposits or similar low-risk liquid assets. This effectively forces a close alliance between stablecoin providers and the banking sector. Carletti concluded, “That means that 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, and that to me is a double form of weakness.”
