Italy’s Central Bank Pushes for Stronger Crypto Regulations to Manage Risks

Italy’s central bank and securities regulator are intensifying efforts to strengthen regulations in the crypto service sector, aiming to mitigate financial and cybersecurity risks.

During the 31st Assiom Forex Congress on February 15, Fabio Panetta, Governor of the Bank of Italy, emphasized the need for robust safeguards against crypto-related threats, including money laundering and financial instability.

Europe vs. US: Diverging Crypto Regulatory Approaches

Panetta highlighted the stark contrast between Europe’s structured approach to crypto regulation and the United States' case-by-case assessment.

The European Union has introduced the Markets in Crypto-Assets Regulation (MiCA) to enhance investor protection and provide regulatory clarity. Meanwhile, the United States continues to evaluate crypto assets individually, classifying them as securities where applicable.

Panetta referenced the Trump administration’s executive order on digital financial technology, issued on January 23, which signals a potential shift towards integrating crypto assets into the financial system. He warned that regulatory inconsistencies between Europe and the US could allow crypto operators to exploit legal loopholes, undermining global financial stability.

Bank of Italy & Consob Strengthen Oversight of Crypto Service Providers

To address these concerns, the Bank of Italy is working closely with Consob, Italy’s securities market regulator, to ensure crypto service providers operating in Italy implement comprehensive risk management frameworks.

This collaboration aims to enforce strict compliance measures covering:
- Strategic, operational, and financial risks
- Money laundering prevention
- Evasion of international sanctions

Big Tech’s Growing Role in Crypto: A New Risk for Banks?

Panetta also voiced concerns about Big Tech companies entering the crypto space, warning that their involvement could pose liquidity risks to commercial banks.

With tech firms offering widely accessible online payment platforms, users may shift their deposits away from traditional banks, affecting their operational stability. Panetta urged for global regulations to prevent tech giants from issuing digital tokens, stressing that unregulated privately issued cryptocurrencies could significantly disrupt the banking sector.

A Call for Global Crypto Regulation

As the crypto landscape continues to evolve, Panetta emphasized the urgency of unified global regulations to ensure financial stability and prevent regulatory arbitrage.

With Italy taking a proactive approach to crypto risk management, its collaboration with European regulators is expected to set a precedent for strengthening digital asset regulations worldwide

(Sources: investing.com, ChatGPT)