EU To Scrutinize Banks' Links With Crypto And Non-Bank Entities

EU regulators to launch an investigation into the interplay between traditional banks and crypto entities.

Who regulates European banks' financial activities?

The European Union is set to embark on a comprehensive investigation into the relationships between traditional banks and non-bank financial institutions (NBFIs), including crypto platforms, led by the European Banking Authority (EBA).

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EBA's Joint Investigation With ESRB And FSB

The EBA, in collaboration with the European Systemic Risk Board (ESRB) and the Financial Stability Board (FSB), is poised to scrutinize the interconnectedness between legacy banks and NBFIs. This initiative, announced by EBA Chair José Manuel Campa, aims to shed light on the extent and nature of interactions between these financial sectors, especially in stress situations. The investigation will delve into the dynamics between traditional banking institutions and diverse entities such as hedge funds, private equity firms, and cryptocurrency platforms.

EBA Chair José Manuel Campa
EBA Chair José Manuel Campa (Photo: IESE Business School)

Understanding The Scale And Implications

The need for this investigation stems from the growing realization that NBFIs, often perceived as an obscure sector, play a significant role in the global financial ecosystem. The FSB estimates the total assets held by NBFIs to be around $218 trillion, constituting nearly 46% of total global assets, compared to traditional banks' $183 trillion. This investigation seeks to unravel the "non-homogeneous" quality of data within this sector and understand the potential contagion risks between banking and non-banking financial institutions.

Recent Regulatory Developments And Proposals

In November 2023, the EBA had already proposed new industry guidelines aimed at strengthening Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) in the crypto sector. These guidelines suggest merging AML/CFT criteria for payment service providers and crypto asset service providers (CASPs). Furthermore, the EBA advocated for enhanced interoperability of CASP protocols to ensure seamless and efficient information transmission.


The upcoming joint investigation by the EBA, ESRB, and FSB marks a critical step in understanding and managing the risks associated with the burgeoning relationship between traditional banking sectors and NBFIs, including crypto platforms. This initiative not only reflects the evolving regulatory landscape but also underscores the importance of transparency and risk mitigation in an increasingly interconnected financial world.

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