(Finance) – “In Europe, the banks are under our supervision they still have limited cryptocurrency-related assets and we have not observed any material exposure to stablecoins so far. Most banks have been hesitant to get involved in cryptocurrencies due to the unique risks of the asset class and price volatility, coupled with regulatory uncertainties,” he said. Elizabeth McCaulmember of the Supervisory Board of the ECB, in a post on the institution’s blog.
McCaul explained that “when we interviewed banks about the risks involved in providing crypto services, they also mentioned i operational risksincluding IT/cyber risk, reputational risk, dependency on third parties, as well as money laundering and terrorist financing risks”.
In addition to smaller and specialized institutions, the ECB official said that “larger banks have also started looking to provide cryptocurrency-related assets, such as custody and trading servicesin response to growing customer demand“.
“Banks have also started exploring the tokenization of traditional instruments such as securities and deposits as a tool to accelerate trade finance, security and repo settlements and to increase efficiency – he explained – When evaluating whether to engage in tokenization activities, a key consideration for banks is that a significant share of potential participants it has to be on the same chain or infrastructure to make it efficient.”
“Banks – he continued – can then wait for a winning paradigm to emerge before engaging in such activities, or they can use the momentum to set the industry standard. From a supervisory point of view, it is It is important to evaluate these products and services according to their economic function: The technology by itself does not change any underlying rights or obligations.
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