Do not regulate crypto, regulate financial institutions, says presidency of the European Banking Authority

Andrea Enria, president of the European Banking Authority (EBA), said it may be more effective to prohibit banks and other financial institutions from holding and selling cryptocurrencies than from directly regulating crypto, according to the Financial Times.

Enria's comments follow the recent evolution towards the regulation of cryptocurrency in Europe. On March 8th, the European Commission released its "Action Plan" to develop an EU-wide regulatory framework for fintech, including Blockchain. Last week, the Governor of the Bank of England pointed out that cryptography should be regulated and not "strictly prohibited".

In a speech in Copenhagen on Friday, Enria said he was not convinced that the lack of cryptocurrency-supporting institutions proves that crypto-currencies themselves should be regulated. He added that the EBA had the idea to limit the contact of regulated companies with crypto in 2014, reports FT.

Enria argues that it does not apply the full force of the regulatory measures of Fintech companies, as long as they do not perform the same functions as banks, by providing credits, debits and cash.

"An excessive extension of the regulatory perimeter [for fintech companies] is likely to be a sub-optimal solution. This could impose overly burdensome financial constraints, as the compliance burden imposed on banks is not sustainable for small innovative firms. "

However, Enria added that EU regulators should not allow "de facto banks" to offer a combination of "deposits and loans" without strict regulatory control.

Enria noted that the regulation of financial technologies should take place throughout the European Union in order to maintain the competitiveness of European companies with the United States and China.

In mid-February 2018, the European Supervisory Authorities, composed of the EBA, the European Securities and Markets Authority (ESMA) and the European Insurance and Occupational Pensions Authority (EIOPA), warned that Cryptocurrencies were risky assets that needed to be protected.