The financial sector is undergoing a transformation linked to the evolution of the digital asset universe. There are currently more than 16,000 different types of crypto-assets since bitcoin began its journey in 2009. Crypto-assets encompass several categories, not only digital currencies such as bitcoin, ethereum or other known cryptocurrencies, but also real estate tokens or NFTs. In the space of just over a decade, cryptocurrencies and central bank digital assets have become the most disruptive phenomenon in the financial sector: an increasingly present reality that organisations must take advantage of by clearly marking out their roadmap.
The emergence of these new securities anticipates new regulatory adaptations that will keep customer relationship models in continuous evolution. Not surprisingly, we are faced with a context in which three fundamental variables are combined: changes in customer relationship channels driven by digitalisation, constant attention to regulatory issues, and the depth of product range demanded by the customers themselves. In this scenario, characterised by the particularities of a market in constant growth and transformation, financial institutions find it increasingly necessary to define their action plan. In this context, Cecabank embraces crypto-assets as a business reality that must be explored, always hand in hand with the regulator and following the rules very closely. Our specialisation and regulatory knowledge of the custodian business, gives us a differential value that will enable us to develop in this field.
The MICA regulation
The new rules form one of the levers of the comprehensive digital finance package of measures supporting the digital transition in the European Union (EU), fostering innovation while ensuring protection. The EU seeks to stimulate the development of various digital financial services while ensuring consumer protection.
To encourage the development and use of technologies, the new regulations seek to provide legal certainty, support innovation, ensure financial stability and protect consumers and investors. In this context, the EU is working on a new regulation regarding the crypto-assets market, better known as the Markets in Crypto-Assets (MiCA) regulation, which is currently being processed and, in principle, it seems that it will be applicable in 2024.
Among recent regulations, in March 2022, the European Parliament approved new measures to support the pilot scheme for market infrastructures based on decentralised registry technology. And in April 2022, Parliament agreed to begin negotiations with EU countries on rules that would allow crypto-asset transfers to be tracked and identified, preventing their use in money laundering and the financing of terrorism, among other crimes.
Thus, the completion of the regulatory framework for the crypto-asset market will provide legal certainty for both financial institutions and retail investors. Furthermore, in recent weeks the European Central Bank (ECB) has warned of the need to reach agreements and speed up regulation to allow digital assets to be consolidated within the financial system. To this end, according to the ECB, they must be urgently included within the regulatory and supervisory framework.
Cecabank, custodian of crypto-assets
Custodian banks, both at national and international level, as is the case of Cecabank, are an essential partner for the creation of new value propositions for customers in the performance of their activity, as they can take advantage of the synergies derived from the activity itself due to their high level of operational specialisation and in-depth regulatory knowledge. Our role as depositaries and custodians of fund managers is highly significant at a time when the number and type of fund managers is increasing and the assets under management are becoming increasingly important.
In this context of opportunity, and from Cecabank's position as a custodian and depositary bank, we cannot refrain from exploring the possibility of becoming a custodian of crypto-assets, not just cryptocurrencies. There is no doubt that the provision of services related to these new securities is still an avenue to be examined by specialised organisations and is likely to have much more scope, at least in the short and medium term, than direct investment in such assets.
At Cecabank we are prepared and support our customers - traditional fund managers, hedge fund managers and venture capital fund managers - in introducing non-conventional assets, leveraging on our specialisation and leadership in depositary services. Given that this is a completely new universe for which there is still no stable "crypto-regulation", all the steps we are taking are geared towards equipping ourselves with the capabilities that will enable us to offer custody services for this new type of assets to customers demanding this service, while maintaining the trust and guarantee that our customers place in us.
Cecabank is one of the pillars of the collective investment system and, in the current environment, we continue to be the safe haven for fund managers and investors. As in any sector, but especially in banking, creating value by focusing on excellence with the customer is crucial. Now more than ever, the role of a trusted partner, a fellow traveller, is becoming a priority for the different stakeholders in the industry.
