UniCredit Warns Europe About Risks in Crypto Regulation
According to UniCredit Deputy Chairwoman Elena Carletti, Europe lacks mechanisms similar to those in the United States that would allow authorities to quickly contain a banking crisis linked to stablecoins.
Summary:
- UniCredit is warning Europe about hidden risks.
- The European deposit guarantee scheme covers only up to €100,000 per depositor.
- The United States protected $3.3 billion of Circle’s reserves during the collapse of Silicon Valley Bank (SVB) in 2023.
According to Carletti, the very structure of MiCA (Markets in Crypto-Assets Regulation) is creating an increasingly close connection between the crypto sector and the banking system, without providing sufficient safeguards for emergency situations.
Where the Problem Arises
When MiCA was designed, its main objective was to bring the crypto sector closer to traditional finance – to make it more transparent, more regulated, and more integrated with the banking system. However, according to Carletti, this is precisely where a potential problem lies.
MiCA requires stablecoin issuers to hold a significant portion of their reserves in liquid assets, including bank deposits. In practice, this means that a large share of the funds backing European stablecoins is stored in commercial banks.
At first glance, this appears reasonable. But if one of those banks encounters financial difficulties, the problem does not remain confined to the banking sector. It immediately affects the stablecoin as well, because its reserves are held there.
One of the biggest concerns, according to Carletti, is the protection of those funds. The European deposit guarantee scheme covers up to €100,000 per depositor per bank, and this limit applies equally to individuals and corporations.
If a stablecoin issuer holds, for example, €500 million in reserves at a single institution, only €100,000 would be protected. The remaining €499.9 million would effectively have no guaranteed protection in the event of the bank’s failure.
In the United States, the situation is different. While the FDIC normally insures deposits up to $250,000 per depositor, authorities also have an additional emergency tool known as the systemic risk exception. This mechanism was used during the collapse of Silicon Valley Bank in 2023.
In a similar scenario, European regulators do not have a rapid mechanism that can exceed the standard €100,000 guarantee limit and prevent a broader financial contagion.
What the United States Did in 2023
In 2023, Silicon Valley Bank (SVB) collapsed within just a few days. At the time, Circle held approximately $3.3 billion of USDC reserves at the bank.
U.S. authorities determined that the risk to the financial system was too great and guaranteed all deposits regardless of size. As a result, Circle’s reserves remained protected, USDC maintained its peg to the U.S. dollar, and the crisis was contained before it could escalate.
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According to Carletti, this is the key difference between the United States and Europe.
The European Union has no comparable emergency intervention mechanism. There is no procedure that allows regulators to quickly override the €100,000 deposit guarantee limit during an extraordinary crisis. If a similar problem were to affect a European stablecoin issuer, authorities would have to rely on standard tools that were primarily designed to protect retail depositors, not reserve accounts containing hundreds of millions or billions of euros.
Why the Warning Is Coming Now
This is not a distant hypothetical risk. MiCA is already in force, and Europe’s stablecoin infrastructure is actively being built.
More and more banks are entering the sector. Recently, Banca Sella became the first Italian bank to obtain a MiCA license, while Qivalis, a consortium involving numerous European banks, is preparing to launch a euro-denominated stablecoin later this year.
In other words, the link between stablecoin reserves and commercial bank balance sheets is already being established. This is not a future scenario – it is a process that is happening right now.
What Such a Scenario Could Look Like
If a major European stablecoin were to face a wave of large-scale redemptions, users would seek to exchange their tokens as quickly as possible.
To meet those redemption requests, the issuer would need to withdraw its reserves from the bank. If a large amount of money is withdrawn in a short period of time, the bank could face an unexpected liquidity shortage.
If news of such a situation became public, other depositors might also begin moving their funds elsewhere. In that case, the problem could quickly spread beyond the stablecoin itself and affect the broader banking system.
The information presented in this article is intended for informational purposes only and should not be interpreted as financial, investment, or trading advice. Coinspress.com does not promote or advocate for any particular investment strategy, asset, or cryptocurrency project. Cryptocurrency markets are highly volatile and unpredictable – always perform your own research and seek guidance from a qualified financial professional before making any investment decisions.
Kosta Gushterov
Reporter at CoinsPress
Kosta has reported on cryptocurrency markets and blockchain infrastructure since 2020, bringing over six years of hands-on experience in the crypto industry built through daily tracking of markets, trends, and emerging blockchain developments. Specializing in Bitcoin on-chain analysis, institutional ETF flows, and digital asset price action, his work has been cited by other news agencies and consistently covers market developments with a focus on data-driven reporting across Bitcoin, Ethereum, Solana, and XRP. Over the years, Kosta has contributed to multiple crypto media outlets in different regions, authoring over 6,000 articles across the sector. His reporting spans cryptocurrency markets and the broader fintech industry, tracking not only price action but also the technological and regulatory forces shaping the ecosystem. To support his analysis, Kosta actively leverages on-chain data and metrics from leading platforms such as Santiment, Glassnode, and CryptoQuant, enabling deeper, evidence-based market insights. He believes in the power of transparency and the data that underpins the blockchain ecosystem. His academic background in Marketing Management from Denmark further complements his analytical approach, adding a strong understanding of communication strategy and content positioning to his work.
