For too long, traditional finance and the cryptoasset sector have been discussed as opposing worlds. Banking was associated with stability and trust. Cryptoassets were associated with disruption and risk. That distinction explains less today. Both industries already provide comparable services and share an interest in protecting their customers and preventing criminals from exploiting their infrastructure.
Convergence is already under way
Cryptoassets can be exchanged, held in custody, used for certain payments or pledged as collateral. The EBA and ESMA have examined cryptoasset lending, borrowing and staking. The Eurosystem has also explored how to settle transactions on distributed ledger platforms in central bank money. Both examples point to the same development. Financial services increasingly run on different types of infrastructure.
MiCA gives the European Union a framework for issuing and offering certain cryptoassets and for the service providers covered by the regulation. Banks bring experience in risk management, liquidity and customer protection. Cryptoasset firms have developed expertise in programmability, custody and systems integration. Combining those strengths can make particular services safer or more efficient.
Speed makes co-operation essential
An asset can move between jurisdictions in seconds. When fraud occurs, that speed widens the gap between the time it takes to move value and the time needed to obtain information or agree on a measure. The FATF has highlighted illicit finance risks associated with virtual assets, including stablecoins, and differences in how jurisdictions implement its standards.
Many networks retain a record of transfers that can be analysed after the funds have moved to a different service. That trail can help locate assets and guide an investigation. Establishing who controls them requires corroboration, while preserving them depends on the legal basis, the competent authority and the custody arrangement.
Establish channels before they are needed
Public–private co-operation starts with practical arrangements. Each party should know whom to contact, what information it may request or share, what safeguards apply and how to confirm that a request has reached the right person. Joint training and exercises based on fictional scenarios can help answer those questions in advance.
Each party has a distinct role. Authorities act within their powers and under the applicable safeguards. Banks, service providers and analytics firms contribute information and technical expertise within the rules that apply to them. A clear, established channel saves time that would otherwise be spent clarifying responsibilities when every hour matters.
The future of finance will be hybrid. Its security will depend on organisations being able to work together when transactions, evidence or assets cross their boundaries. Those bridges need to be built before they are needed.