European regulators may face greater difficulty containing financial shocks tied to crypto assets and banks than during the 2023 Silicon Valley Bank (SVB) crisis in the United States, according to a senior executive at UniCredit. Moreover, concerns are growing over the increasing links between stablecoin issuers and the traditional banking sector. Therefore, regulators are under pressure to assess potential systemic vulnerabilities.
The collapse of Silicon Valley Bank disrupted crypto markets after the lender held deposits backing several digital asset firms. Additionally, the crisis destabilised a major stablecoin and triggered heavy redemption activity, which later contributed to broader banking stress and the failure of Signature Bank.
Regulatory differences raise stability concerns
Elena Carletti, deputy vice chair and head of the risk committee at UniCredit, said European authorities may struggle to replicate the emergency protections introduced by US regulators during the crisis. Moreover, US authorities invoked a systemic risk exception that guaranteed all deposits, including those tied to crypto firms. Therefore, the move helped restore stability to both banking and digital asset markets.
“The coverage and protection … was given to all deposits, including stablecoin companies, and that also allowed to maintain the stability of the stablecoin,” Carletti said. However, she added that “The same decision cannot be easily taken in Europe.”
Stablecoin rules increase links to traditional banks
The European Union’s Markets in Crypto-Assets Regulation (MiCA) requires stablecoin issuers to maintain reserves in bank deposits or in other low-risk, liquid assets. As a result, the regulation strengthens ties between crypto firms and the banking sector.
“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,” Carletti said.
Additionally, stablecoins remain a major focus for regulators because they connect digital assets with mainstream financial infrastructure. Therefore, policymakers continue to monitor whether tighter integration between banks and crypto markets could amplify systemic risks during periods of financial stress.
