ECB President Mario Draghi Hints At European Banks Entering the Crypto Markets

The banking institutions since the beginning have maintained a strong hostility for cryptocurrencies. Digital currencies pose a big challenge and threat to the existing banking system as they an edge over the banks in terms of instant payments and low transaction fees.

However, in what might sound to be quite bizarre, in his recent address to the European Parliament, European Central Bank (ECB) chief Mario Draghi said that European banks might think about holding positions in Bitcoins following the development of Bitcoin futures listing by the U.S. exchanges.

In December 2017, the CBOE and CME Group announced the launch of their Bitcoin futures contracts which are completely cash-settled. These futures contracts can be bought by anyone and everyone without actually holding the virtual currency.

Mr. Draghi said: “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.”

He further added that “…., 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.”

Mr. Draghi also further cautioned the European banks saying that cryptocurrencies are “very risky” assets and any investment in them should be done with a sense of responsibility. He also said that ECB is working on a “single supervisory mechanism” to “identify potential prudential risks” which banks could possibly face while investing in virtual digital currencies.

This shows that as far as ECB is concerned, it maintains a “supervisory” stand while dealing with cryptocurrencies instead of a “regulatory” stand. The supervisory mechanism mentioned by Mr. Draghi will be designed in such a way that any major downfall in the crypto space won’t affect banks severely.

Daniele Nuoy, ECB chief supervisor on Wednesday said that banks don’t consider crypto regulation to be a top priority. She said: “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.”