The Bank of Italy Challenges Bitcoin!

The Bank of Italy is set to publish its crypto guidelines, marking a crucial step in the implementation of the European Union’s MiCA regulation. In a statement that is already causing a stir, Governor Fabio Panetta questions Bitcoin’s status as currency, raising fundamental questions about the future of cryptos in the country.

A rigorous implementation of the European framework

The Bank of Italy is committed to developing detailed guidelines to implement the MiCA regulation. Indeed, in his July 9 speech to the Italian Banking Association, Fabio Panetta highlighted the dual ambition of these guidelines: ensuring a rigorous implementation of MiCA and strengthening the protection of crypto users.

The Italian regulator establishes a crucial distinction between two categories of tokens meeting the payment criteria:

1. Asset-Referenced Tokens (ART): These tokens are indexed to a basket of diversified assets, aiming to offer increased stability.
2. Electronic Money Tokens (EMT): These tokens are supported by a single official currency, making them preferable for everyday transactions.

Panetta emphasizes that only EMTs, whose value is directly tied to fiat currency, can “fully assume the role of a means of payment while maintaining public trust.” He considers these tokens as the most suitable for fulfilling this function.

A cautious approach to the challenges of the crypto sector

The Bank of Italy maintains an increased vigilance towards decentralized cryptos such as Bitcoin and Ethereum. Panetta thus highlighted the potential challenges, emphasizing the risk of using these assets to circumvent tax regulations and anti-money laundering measures. 

He argues that these cryptos do not gather the essential attributes to fulfill the three fundamental functions of money: medium of exchange, store of value, and unit of account.

As part of its regulatory strategy, Italy already plans a range of deterrent sanctions. Offenses, ranging from market manipulation to insider trading, could be punished with fines of up to 5 million euros.

Nevertheless, despite this cautious approach, Italy remains receptive to financial innovation. Thus, the Central Bank launched an ambitious program last year aimed at familiarizing Italian financial institutions with the concepts of decentralized finance (DeFi) and tokenized assets.