Despite caution, Italian banks, like Intesa Sanpaolo, are quietly entering the crypto space, buying Bitcoin and developing blockchain-based financial products.
The Bank of Italy has once again expressed concerns over the growing influence of crypto in traditional finance. In its latest Financial Stability Report, the central bank warned that the global integration of digital assets poses a significant risk to financial stability.
For years, central banks have raised alarms about the systemic threats crypto presents. These include volatility, regulatory gaps, and the potential for contagion across markets. However, recent political changes have intensified these worries.
The bank noted that the election of Donald Trump and his administration’s pro-crypto policies have led to significant price increases in digital assets. The bank cautioned that closer integration of crypto with traditional finance could create vulnerabilities in global markets.
As of March, the global crypto market was valued at $2.75 trillion. Bitcoin accounted for over 60% of this, with 30% coming from other unbacked crypto assets. Stablecoins, linked to traditional currencies, made up only 9%.
The Bank of Italy has also raised concerns about the growing ties between government, finance, and crypto. It specifically highlighted the use of Bitcoin in corporate treasuries and ETFs, warning of potential conflicts of interest and governance gaps.
The Bank warned about the influence of dollar-backed stablecoins like Tether’s USDT and Circle’s USDC. A widespread run on these could destabilise global markets by triggering a fire sale of US government bonds.
Despite the Bank of Italy’s cautious stance, some Italian banks are embracing crypto. Intesa Sanpaolo, Italy’s largest bank, purchased bitcoins and underwrote the country’s first blockchain bond.
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