- European Central Bank’s finance head warned regulators against crypto asset providers.
- The ECB said crypto asset providers are “a huge consumer protection issue”.
- ECB chair called crypto asset providers “animals with whom it is difficult to engage.”
The head of financial supervision at the European Central Bank (ECB) intimated crypto regulators based in Europe against crypto asset providers while calling them a threat to consumer protection. According to the ECB, crypto asset providers “never think about financial risks” and neither do they respect national borders.
ECB’s supervisory board chair, Andrea Enria, vocally shared:
“I am concerned for my colleagues that will have to perform this supervision in the future because these are animals with whom it is difficult to engage.”
Sam Bankman-Fried’s notable crypto exchange collapsed last week after unusual involvement with Bankman-Fried’s trading firm Alameda Research. After facing an $8 billion shortcoming, FTX announced bankruptcy subjecting customers across the globe to heavy losses.
FTX’s meltdown came after some major scandals in the crypto landscape, including the TerraUSD downfall, Celsius Network bankruptcy, as well as Voyager Digital’s failure.
Meanwhile, the EU is planning to implement a regulatory framework for crypto asset providers, titled Markets in Crypto-Assets. Although the ECB awaits an “interesting challenge” since legislation will substitute a handful of national rules, Enria was proud that the EU will be the first jurisdiction to “bring these entities under some form of supervision”
Enria stated that crypto asset providers are too focused on IT securities while completely disregarding any financial risks. He further queries “ I don’t know how our toolbox will work with these types of animals.”
Enria stresses that the crypto market is currently “not big enough” to facilitate financial stability and needs support from banks, in order to protect consumer authorities.