A senior UniCredit official warned on May 28 that Europe’s deposit insurance framework may be insufficient to contain financial stress from stablecoin reserve accounts, leaving the region vulnerable to the kind of banking turmoil the U.S. navigated in 2023.
Elena Carletti, UniCredit’s deputy vice chair and head of the bank’s board risk committee, made the comments at a banking conference hosted by IESE Business School in Madrid. She highlighted a structural mismatch between European and U.S. crisis response tools.
“The same decision cannot be easily taken in Europe,” Carletti said, referring to the emergency measures deployed after Silicon Valley Bank and Signature Bank collapsed in March 2023. U.S. regulators guaranteed all deposits at both institutions, including balances above the federal insurance limit, after the failures threatened crypto firms holding reserves there.
Circle, the issuer of USDC stablecoin, had $3.3 billion of reserves held at Silicon Valley Bank when it collapsed. The bank’s failure briefly destabilized the stablecoin market, causing USDC to lose its dollar peg as investors rushed to redeem tokens.
Under MiCA, the European Union’s Markets in Crypto-Assets regulation, stablecoin issuers must hold reserves in liquid assets such as bank deposits and government securities. However, EU deposit insurance is capped at €100,000 (roughly $116,500) per depositor per bank. This limit is far lower than the emergency protections extended in the U.S., where deposit guarantees were broadened to cover all balances at failing institutions during the 2023 crisis.
Carletti framed the gap as a double vulnerability. “That means that we are forcing a certain alliance of stablecoin and crypto providers with the banking sector without the possibility of extending insurance in the same way, and that to me is a double form of weakness,” she said.
The warning underscores a regulatory trade-off in Europe’s approach to stablecoin oversight. MiCA mandates that reserves be held in traditional banking channels to ensure stability and redemption rights. Yet the framework does not grant regulators the emergency tools to backstop those reserves in a systemic crisis, unlike the ad hoc measures the U.S. Federal Reserve and FDIC deployed in 2023.
The deposit insurance gap could force stablecoin issuers to fragment reserves across multiple banks to stay within insurance limits, increasing operational complexity. Alternatively, they may concentrate reserves in the largest, most systemically important European banks, potentially amplifying contagion risk if those institutions face stress.
Carletti did not specify which European authorities she believes lack adequate crisis tools, nor did she name other stablecoin issuers or reserve holders potentially exposed under MiCA’s rules. The EU has not publicly responded to her concerns.
The 2023 precedent
The U.S. response to the 2023 banking collapses set a high bar for crisis containment. Within days of SVB’s failure, the Federal Reserve and FDIC announced that all deposits, regardless of size, would be protected. This emergency action restored confidence in crypto markets and prevented broader contagion.
Europe has no equivalent mechanism. The EU’s deposit guarantee scheme operates at the member state level and is capped at €100,000 per account per bank. Emergency liquidity assistance from the European Central Bank exists, but it requires collateral and does not guarantee deposits in the way the U.S. measures did.
Carletti’s remarks suggest that as stablecoin adoption grows and reserve balances increase, the structural gap between European and U.S. regulatory frameworks could become a material vulnerability. If a large European bank holding significant stablecoin reserves were to fail, the €100,000 insurance cap would leave the majority of those reserves unprotected, potentially triggering a redemption crisis for the stablecoin itself.
