Italy's central bank eyes crypto regulation for risk management

Italy's central bank and securities regulator have been discussing ways to put in place proper safeguards against financial and cybersecurity risks in the crypto service sector.

Fabio Panetta, Governor of the Bank of Italy, pointed out these efforts during the 31st Assiom Forex Congress on February 15, stressing the need to manage risks tied to crypto assets, such as money laundering and threats to financial stability.

The regulatory landscape for crypto assets varies significantly between Europe and the United States. While Europe has embraced the Markets in Crypto-Assets Regulation (MiCA) to bolster investor protection, the US continues to assess crypto assets on an individual basis, determining their classification as securities when necessary.

This divergence in regulatory approaches was underscored by Panetta in light of the Trump administration's executive order on digital financial technology, dated January 23, which suggests an openness to integrating crypto assets into the financial system.

Panetta expressed concern that operators in the crypto space might exploit these regulatory discrepancies, potentially compromising the integrity of the financial system. He stressed the need for careful assessment of these differences once the US authorities clarify their stance, to understand the international implications.

In his address, Panetta also mentioned an ongoing collaboration between the Bank of Italy and the Commissione Nazionale per le Societa e la Borsa (Consob), the Italian securities market regulator.

This partnership aims to ensure that crypto service providers looking to operate in Italy have robust mechanisms in place to handle various risks, including those related to strategic, operational, and financial aspects, as well as risks associated with money laundering and the evasion of international sanctions.

Furthermore, Panetta highlighted the potential threats posed by Big Tech companies entering the crypto space. He warned of the risks to commercial banks' liquidity, as users may increasingly turn to online applications for depositing and withdrawing funds.

Panetta called for global regulations to prevent tech giants from distributing digital tokens through widely accessible online payment platforms, cautioning that commercial banks could lose a significant portion of their operations if privately issued tokens gained broad acceptance.

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