Banks May Get Involved in Cryptocurrencies, Says ECB President
ECB president Mario Draghi has said that European banks may eventually dive into the cryptocurrency market because of the release of futures contracts on Bitcoin.
When the topic of banks comes up, the idea of them holding cryptocurrencies often seems laughable. Many banks — most notably JP Morgan, whose CEO called Bitcoin a “fraud” outright — don’t care much for the cryptocurrency world, preferring to do their business in fiat.
However, European Central Bank (ECB) chief Mario Draghi addressed the European Parliament on Monday and delivered an opening statement that suggests banks may give up their disapproval-tinged mantras and get involved with cryptocurrencies.
“Let me first say that we are not observing a systemically relevant holding of digital currencies by supervised institutions—by banks, in other words. Actually, the credit institutions established in the European Union are showing a limited appetite for digital currencies like Bitcoin, notwithstanding the high level of public interest. However, recent developments, such as the listing of Bitcoin futures contracts by US exchanges, could lead European banks too to hold positions in Bitcoin, and therefore we will certainly look at that,” Draghi said.
He added that European banks should use caution when investing in cryptocurrencies due to the volatile nature of what he called “very risky assets.”
In addition to this warning, Draghi also said the ECB is working on a “single supervisory mechanism” to “identify potential prudential risks” that banks could face when investing in these digital tokens.
It appears as though the ECB is ready to accept that banks on the continent will eventually start dealing with these digital assets and using them as financial instruments.
The single supervisory mechanism may be designed as a response to such developments, aiming to ensure that the pitfalls don’t become too severe for banks eyeing this space.
On Wednesday, ECB chief supervisor Daniele Nuoy said the bank did not consider regulation of the cryptocurrency market a top priority.
“We scrutinize the issue in a regulatory perspective, we are ready to do something if it was needed, but so far it’s not exactly very high on our to do list,” she said.