Italy to issue guidelines on implementation of EU rules

The Italian central bank is set to publish guidelines for the implementation of new European Union cryptocurrency regulations. Governor Fabio Panetta announced that the guidelines will aim to ensure the effective application of the EU’s Markets in Cryptocurrency Regulation (MiCA) while safeguarding cryptocurrency holders.

In his speech before the Italian Banking Association, Panetta presented the risks and differences in the crypto-asset market. He emphasized the need for regulation, especially in the case of stablecoins, which are digital assets linked to a portfolio of reserve assets such as currencies, deposits or securities.

Without strict regulation, these stablecoins could face redemption runs if holders lose confidence. Unsecured cryptoassets like Bitcoin or Ethereum, with no intrinsic value or income generation, pose significant risks due to their volatility and the opaque, informal circuits on which they often trade.

Risks and Categories in the Cryptocurrency Market

Highlighting the potential risks, Panetta noted that these unsecured assets are often held by individuals seeking speculative gains, sometimes to avoid tax and anti-money laundering regulations. Their value, often divorced from fundamentals, can fluctuate wildly, making them unsuitable as a reliable means of payment, store of value or unit of account.

Although they currently constitute a small part of the market, the share of unsecured crypto assets held by unwitting investors could grow, especially in emerging markets. The EU MiCA framework, which will be fully implemented this year, aims to mitigate these risks by establishing detailed rules for different types of digital tokens.

MiCA differentiates between single-currency-linked electronic money tokens (EMT), multi-asset-linked asset tokens (ART), and uncovered digital assets. While EMT and ART are considered stablecoins with strict regulatory requirements, uncovered assets and utility tokens are mainly subject to prior notification obligations.

Panetta said these new regulations will finally bring control to the cryptocurrency market, although much remains to be done because the sector is too complex and changes rapidly. The risk of managing stablecoins on unreliable platforms, especially outside of Europe, would further underscore the need for strong financial and operational risk management for traditional and non-traditional financial intermediaries.

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