Italy Tightens Crypto Reins: Panetta Calls for Global Regulation

Italy is bolstering its crypto regulations to enhance financial and cybersecurity safety. The Bank of Italy and the country's financial markets regulator, Consob, are actively engaging with cryptocurrency service providers to ensure compliance with evolving regulations. Bank of Italy Governor Fabio Panetta highlighted these efforts during the 31st Assiom Forex Congress on February 15, addressing growing concerns about digital finance cybersecurity risks and cryptocurrency oversight.

Panetta emphasized the need to tighten safeguards as the crypto sector gains mainstream adoption to prevent financial instability and illicit activities. Italy's approach aligns with the European Union's Markets in Crypto Assets Regulation (MiCA) framework, which aims to create clear guidelines for the sector. Panetta drew attention to the key differences between European and US regulatory frameworks, noting that while Europe has established MiCA, the US continues to regulate cryptocurrencies on a case-by-case basis, often depending on whether a particular asset is classified as a security.

To mitigate financial and cybersecurity risks, the Bank of Italy and Consob are increasing their surveillance of crypto firms operating within the country. Regulators have flagged liquidity risks, especially as more users turn to digital platforms for deposits and withdrawals. The rapid movement of assets within the crypto ecosystem could pose challenges to financial stability if left unchecked. As part of this effort, the Bank of Italy is actively engaging with crypto companies to ensure they implement robust safeguards to manage strategic and operational risks, financial risks, money laundering concerns, and international sanctions compliance.

Panetta stressed that any company seeking to operate in Italy's crypto market must meet strict regulatory standards to prevent illicit activities and ensure a stable financial environment. Beyond traditional cryptocurrencies, Panetta also raised concerns about the rise of digital tokens issued by major tech companies. He cautioned that widespread adoption of these assets could threaten the traditional banking system as commercial banks might lose a significant portion of their operations. He underscored the need for coordinated global regulation to prevent disruptions in the financial sector. Without proper oversight, private digital currencies backed by large corporations could weaken central bank control over monetary policy and financial stability.

Last year, Italy expanded its regulatory framework to enhance crypto market surveillance and align with MiCA regulations. The updated policies include measures to prevent insider trading, market manipulation, and unauthorized disclosure of confidential information. To enforce compliance, Italy introduced strict penalties with fines ranging from $5,400 to