- Italy sees crypto’s financial entanglement as a stability risk.
- Trump’s crypto support may heighten global market exposure.
- Dollar-dominated stablecoins pose threats to EU sovereignty.
The Bank of Italy has sounded an alarm over the growing integration of cryptocurrencies into mainstream financial markets, cautioning that the trend poses a risk to global market stability, particularly under the pro-crypto policies of the Trump administration.
The central bank, in its April Financial Stability Report, identified an increase in the prices of digital assets after Trump’s victory at the polls and the resulting relaxing of regulatory attention in the United States. The Bank warned that increased interdependence between crypto and finance could make markets more exposed to shocks and contagion.
“The closer these assets get to mainstream finance, the greater the risk to financial stability,” the report stated.
U.S. Influence and Corporate Exposure
The report criticises the growing influence of U.S.-based firms in the crypto sector, with approximately 75% of major digital asset companies operating without adequate governance oversight. It also raised alarms over the increasing use of Bitcoin by corporate treasuries and ETFs to support stock valuations.
Furthermore, it warned of potential conflicts of interest and concentration of power, particularly among digital platforms not subject to strict financial regulations.
Stablecoins and European Sovereignty
One of the key issues raised was the prevalence of dollar-backed stablecoins such as Tether (USDT) and USD Coin (USDC). The Bank cautioned that a general run on stablecoins could lead to the mass selling of U.S. Treasury bonds, affecting global liquidity.
In addition, it cautioned that stablecoins pegged to the euro issued by American companies would undermine EU authority over its monetary systems.
Despite these warnings, Italy’s largest bank, Intesa Sanpaolo, is expanding into crypto, having purchased €1 million in Bitcoin earlier this year and backing the country’s first blockchain bond.
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