Today the European Systemic Risk Board (ESRB) published a paper outlining potential policy options for crypto-assets and decentralized finance (DeFi). Like other stability boards, it focuses on how to prevent any instability in the crypto sector from impacting traditional finance (TradFi). The paper also suggests how future regulations might apply to DeFi.
At the moment, the ESRB sees limited interconnectedness between crypto and TradFi, although it is concerned that it could change quickly. It shared some stats from a survey of 105 Europan banks in mid-2022.
Just three banks had any banking or trading book exposures, and the figure was less than €100,000 combined. One bank had a crypto derivative exposure of around €100 million. Two banks had crypto assets under management totaling €5 million. And three banks held crypto in custody with a combined value of €212 million.
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