INSTITUTIONAL | Europe is More Vulnerable to a Crypto-Linked Banking Crisis Than U.S, Says a Leading European Bank

UniCredit has warned that Europe may be less equipped than the United States to contain a future banking crisis linked to the cryptocurrency sector, raising concerns about potential vulnerabilities in the European Union’s landmark crypto regulatory framework.

Elena Carletti, deputy vice chair of Italy’s UniCredit and head of its board risk committee, said Europe lacks some of the emergency tools U.S. regulators used during the 2023 collapse of Silicon Valley Bank and Signature Bank, events that triggered turmoil across crypto markets.

Speaking at a banking conference in Madrid, Carletti pointed to the U.S. decision to guarantee all deposits at the failed lenders, including those belonging to stablecoin issuers, as a key factor in preventing a broader market panic. She said a similar intervention would be more difficult to implement in Europe.

Her comments come as the European Union rolls out the Markets in Crypto-Assets (MiCA) framework, widely viewed as one of the world’s most comprehensive regulatory regimes for digital assets. Under the rules, stablecoin issuers must hold reserves in bank deposits and other highly liquid assets, creating closer ties between crypto firms and the traditional banking system.

Carletti argued that while MiCA is designed to strengthen oversight and consumer protection, it may also create new vulnerabilities if stablecoin reserves become concentrated within the banking sector without equivalent crisis backstops.

Europe’s deposit guarantee schemes typically cover up to €100,000 ($113,000) per depositor per bank, a level she suggested may be insufficient if large stablecoin reserve accounts come under stress. The result, she said, is a “double weakness” in which crypto firms become more closely linked to banks while lacking the broad protections U.S. authorities were able to extend during the 2023 crisis.

In U.S case, he regulators later guaranteed all deposits at Signature Bank and SVB, including balances above the federal insurance limits which helped to restore confidence in the crypto markets.

“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,” said Carletti.

The warning highlights growing debate over how regulators should balance tighter oversight of digital assets with the systemic risks that may emerge as crypto firms become more integrated into mainstream finance. It also comes as European authorities push crypto companies to comply with MiCA licensing requirements ahead of key implementation deadlines across the bloc.

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