Financial market – Crypto assets keep the FMA busy

Crypto assets, digital assets, which also include cryptocurrencies such as Bitcoin, Ether and others, are increasingly involved in criminal activities. This was pointed out by the Danish Financial Supervisory Authority (FMA) at its annual press conference on Tuesday. Already every second criminal complaint from the domestic finance sheriffs in the past year was related to suspicion of criminal activity related to crypto assets. The shortcoming here: With the exception of the control of money laundering, this area is not yet under official supervision, as the FMA chiefs Helmut Ettl and Eduard Müller pointed out. Actions are largely in a legal vacuum, “we as the FMA actually have no leverage”.

At EU level, the so-called MiCA regulation (Markets in Crypto Assets) is being prepared, but it is not planned until 2024. With regard to cryptocurrencies, which are considered to be particularly volatile and high-risk, it must therefore be emphasized that there are no supervision here.

Real abuse has risen sharply, especially during the pandemic, Müller reported. There are more and more scammers who “invented some kind of websites” when they market cryptocurrencies and then simply turn them off again when investors demand their money back. According to Müller, this has “extremely increased”.

The FMA sees “major challenges” from the war in Ukraine

The FMA is currently only authorized to investigate compliance with money laundering rules. If you want to offer digital exchanges (purses), you must register with them. Ettl said that these companies would be controlled for the prevention of money laundering according to the same criteria as banks. In 2021, there were 21 registrations out of 60 applications, six of which were withdrawn. According to Ettl, the Financial Markets Authority demands the topic of money laundering prevention “very, very strongly”. “If money laundering is going on anywhere at the moment, it’s in that area.”

Austria’s financial market has remained stable despite the Corona crisis, as also announced by the FMA, which oversees banks, insurance companies, investment funds, pension funds and corporate income funds. The rising geopolitical tensions surrounding Russia’s war in Ukraine “pose major challenges for European business and politics.”

Ettl and Müller emphasized that some of the economic structures needed to be adapted. “Rapidly rising energy and commodity prices as well as material shortages are driving inflation, which is expected to force a change in interest rates in monetary policy and will be a particular challenge for financial participants.” At the same time, in the light of progressive climate change, the transition to a more sustainable economic model must be pushed even more consistently. Against this background, Ettl and Müller assume “serious effects” on the “Austrian financial market and all its participants”. This necessitates a “forward-looking adjustment of enterprise policy”.

In that regard, the FMA’s board members urged the banks to exercise caution when paying dividends on Tuesday. Stability and crisis resilience should not be undermined. Although the volume of problem loans declined in 2021, credit institutions’ core tier 1 capital ratios fell from 16.1 percent to 15.7 percent (although this was the second-best value historically).

Financial Supervisors defend actions at Sberbank Europe

Regarding Sberbank Europe, the Vienna-based subsidiary of the Russian Sberbank, the FMA executives said the case had shown the stability of the local deposit insurance. As in many previous cases, the deposit guarantee turned out to be a kind of prepayment. For the more than 900 million euros paid out to protect depositors, has now flowed back into the deposit insurance, including interest, Müller said.

At the same time, Ettl denied that the FMA had helped Sberbank Europe solve its problems by intervening at an early stage. Only early intervention at the institute, which was shaken by a “bank run” as a result of sanctions against Russia, stabilized the situation. A decision had to be made within a few hours because money had already been withdrawn from the institute. In hindsight, it turned out to be correct, says Ettl. The situation stabilized immediately. “It would have become an Austrian problem if nothing had been done.” (kle)

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