EU regulators to investigate banks’ crypto exposure
The European Banking Authority (EBA) is investigating the linkages of legacy banks with non-banking financial institutions (NBFIs).
The European Union's banking regulator, the European Systemic Risk Board (ESRB) and the Financial Stability Board (FSB) review hedge funds, private equity and crypto platforms.
The intention was announced by EBA Chairman José Manuel Campa in an interview with the Financial Times on January 3. Campa believes that to understand the extent of contagion between banking and non-banking financial institutions in a distressed state, the entire “chain within NBFIs” needs to be explored.
“We need to do more and we will do more. We need to have an understanding of the entire root chain in NBFIs.
The Executive Board reviewed the balance sheet of the banks including loans to non-banks. He believes that NBFIs are a “hidden sector” with “unbroken” data quality.
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According to FSB estimates, the total value of assets held by NBFIs is close to $218 trillion, comprising 46 percent of total global assets. By contrast, traditional banks have about $183 trillion.
In the year In November 2023, the EBA proposed new industry guidelines for Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) in the crypto sector. In particular, the EBA proposed AML/CFT integration for payment service providers and crypto asset service providers (CASPs). He also suggested that CASPs should enforce the interoperability of their protocols to “enable data transfer in a seamless and interoperability manner.”
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