Bank of Italy Calls for Stricter Regulation of Stablecoins
The Bank of Italy has raised alarms over the risks associated with multi-issuance stablecoins, urging tighter controls to protect the European Union’s (EU) financial stability. Chiara Scotti, vice director of the Bank of Italy, recently spoke at the Economics of Payments Conference in Rome and highlighted the challenges posed by these digital tokens.
Understanding the Concern Around Multi-Issuance Stablecoins
Multi-issuance stablecoins are digital assets issued by multiple entities in different nations under a unified brand. While these tokens could enhance liquidity and scalability in global markets, Scotti warned that they simultaneously pose “considerable legal, operational, liquidity, and financial stability risks,” particularly if any issuer operates outside the EU’s regulatory framework.
To mitigate these risks, Scotti recommended that such stablecoins should only operate within jurisdictions adhering to equivalent regulatory standards. Additional measures include ensuring redemption at par and implementing cross-jurisdictional crisis protocols.
The Role of MiCA Regulations
In the European Union, stablecoins fall under the Markets in Crypto-Assets Regulation (MiCA) framework. Issuers must meet strict requirements, including being EU-authorized. Stablecoins are categorized into asset-referenced tokens or e-money tokens, with algorithmic stablecoins effectively prohibited. Scotti expressed concerns that multi-issuance stablecoins might undermine these regulatory provisions without robust cross-border cooperation among supervisory authorities.
Scotti added that stablecoins can lower transaction costs and offer 24/7 efficiency, making them a promising financial tool. However, she advocated for tokens pegged to a single fiat currency for their suitability as payment instruments, further emphasizing the need for unified guidelines.
The Italian Government’s Stance on Stablecoins
Italy’s regulators have joined several EU counterparts in urging stricter oversight of stablecoins. The Commissione Nazionale per le Società e la Borsa (CONSOB) has advocated transferring regulatory authority over crypto firms to the European Securities and Markets Authority based in Paris. Italian officials, including Fabio Panetta—Governor of the Bank of Italy—also suggested a euro-based central bank digital currency (CBDC) as a safer alternative to address risks associated with cryptocurrency growth.
Potential Consequences of Dollar-Pegged Stablecoins
An April report from the Bank of Italy flagged the potential dangers of dollar-pegged stablecoins becoming systemic. Disruptions in stablecoin operations or their underlying U.S. government bonds could trigger ripple effects across the global financial system. Furthermore, Italy’s Minister of Economy and Finance, Giancarlo Giorgetti, warned that U.S. stablecoin policies could undermine the euro’s dominance.
Looking Ahead
The Bank of Italy is closely monitoring stablecoin development and plans to release updated guidelines in the near future. As stablecoins continue to gain traction in financial markets, the need for stronger governance, transparency, and collaboration across borders is becoming increasingly evident.
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