Crypto Firms That Act Like Banks Should Be Regulated Like Them, ECB Official Says

But supervision of bank-like crypto firms could be a pain for regulators, said Andrea Enria, chair of the supervisory board at the European Central Bank.

AccessTimeIconNov 29, 2023 at 11:54 a.m. UTC
Updated Jan 26, 2024 at 3:14 p.m. UTC
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If a crypto firm starts acting like a bank, it should be regulated like one, which won't be easy, said Andrea Enria, chair of the supervisory board at the European Central Bank (ECB), during a Wednesday interview with four European Union media outlets.

The ECB's planned digital euro and private crypto aren't a threat to the role of banks, Enria said. Supervision of crypto companies, however, could be more challenging than overseeing banks because certain services provided by the sector can "to a large extent, mimic the provision of bank-like services" in payments as well as decentralized finance (DeFi).

"And here the difficulties are serious," Enria said. "For us, there will mainly be the issue of deterritorialization – the fact that these entities sometimes do not have precise headquarters."

The world's largest crypto exchange, Binance, which recently reached a landmark $4.3 billion settlement with the U.S. government for serving local customers without the right approvals, famously operates globally without a headquarters. The revelations following the 2022 collapse of multibillion-dollar enterprise FTX showed "a lot of opacity" within crypto firms.

"You have an issue of consolidation. You have seen in the case of FTX that you cannot have a group-wide perspective of the business and of the risks that these entities take," Enria said.

A 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 hard to supervise, he said.

"That will be the challenge for us more than for the banks. The issue will be to make sure that once somebody is conducting banking activity, it’s brought under the remit 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, widely expected to challenge private crypto as a means of payment.

Edited by Sheldon Reback.

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Sandali Handagama

Sandali Handagama is CoinDesk's deputy managing editor for policy and regulations, EMEA. She does not own any crypto.


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