European banking regulator ‘concerned’ about finding staff to oversee crypto

by Arthur · July 26, 2022

A central regulator tasked with overseeing Europe’s landmark bid to regulate cryptocurrencies sees the ability to employ specialist staff as a “major concern”, highlighting concerns over the government’s capacity to oversee digital asset markets.

José Manuel Campa, head of the European Banking Authority, said his organization was also concerned about the logistics of planning for its new powers since it won’t know which digital coins it has the authority to oversee until very close to 2025, when Europe’s sweeping new crypto regulations to come into force.

Campa said in an interview that talent retention was already a “big concern . . . especially in technology, everything related to crypto, digitization [or artificial intelligence]. This is in demand throughout society.”

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The Paris-based EBA, created in the wake of the financial crisis to ensure Europe’s banks had enough capital to weather future storms, is tasked with overseeing “significant” tokens widely used as a means of payment and popular tokens linked to traditional assets , under Europe’s proposed Markets in Cryptoassets Regulation (Mica).

The regulator’s comments underscore difficulties other authorities face as they try to get a handle on the fast-moving digital asset sector.

Banks, fintechs and consultancies have offered lavish packages to woo experts whose skills are most in demand. Record inflation across the eurozone has also driven higher wage demands, as employees seek packages to compensate for increased living costs.

The EBA’s pay is in line with the European Commission’s, and Campa said giving the regulator a free hand on pay was “not within the scope of possible discussions” between the EBA and the Commission.

Campa said the EBA is also concerned that, unlike banking supervision, the set of institutions it must oversee is not defined and could change at the last minute. “So I don’t know exactly what I will be confronted with in two years,” he said.

He said the “very dynamic” nature of the crypto sector means regulation “naturally tends to be behind the curve”. Campa acknowledged that in three years, crypto may have “moved and transformed into other uses that I cannot foresee”.

Still, Campa said he was not worried about the reputational risk if the EBA were to get it wrong in a sector called the financial “Wild West” by Gary Gensler, head of the US Securities & Exchange Commission.

“My concern is more about securing the risks we’ve identified. . . [in the crypto market] is properly administered. If we don’t do as well as we should, we have to live with the consequences, he said.

The EBA chief was upbeat about the risks to the traditional financial sector from Europe’s darkening economic outlook, stressing that he did not see a financial crisis “any time soon” and that Europe’s banks should be able to maintain lending to the economy.

“We are not in a macro [economic] environment that points towards recession, we are in a macro environment that points towards reduced growth. . . I’m not worried about the banks really cutting back on credit, he said, striking a different note to Bank of England officials who have already seen “preliminary signs” of banks pulling back.

The EBA will try to gauge banks’ exposure to rising interest rates in next year’s stress tests, a typical annual exercise designed to ensure banks have deep enough pockets to survive crises they may face. The European Systemic Risk Board, which monitors risks to Europe’s financial system, is in the “very early stages” of setting the macroeconomic scenarios against which the banks will be tested.