The European Central Bank’s (ECB) head of financial supervision warned European crypto regulators against crypto asset providers, calling them a threat to consumer protection.
The ECB claims that crypto asset providers “never consider financial risks” and do not respect national borders.
Andrea Enria, chair of the ECB’s supervisory board, stated unequivocally:
“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.”
Last week, Sam Bankman-well-known Fried’s crypto exchange collapsed due to unusual involvement with Bankman-trading Fried’s firm Alameda Research. Following a $8 billion shortfall, FTX declared bankruptcy, subjecting customers worldwide to significant losses.
The collapse of FTX followed several major scandals in the crypto landscape, including the demise of TerraUSD, the bankruptcy of Celsius Network, and the failure of Voyager Digital.
Meanwhile, the EU intends to implement Markets in Crypto-Assets, a regulatory framework for crypto asset providers.
Although the ECB anticipates a “interesting challenge” because legislation will replace a handful of national rules, Enria is pleased that the EU will be the first to “bring these entities under some form of supervision.”
According to Enria, crypto asset providers are overly focused on IT securities while completely ignoring any financial risks. He continues, “I’m not sure how our toolbox will work with these types of animals.”
Enria emphasizes that the cryptocurrency market is currently “not big enough” to facilitate financial stability and that it requires support from banks to protect consumer authorities.