Bank of Italy questions Bitcoin!

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

Rigorous implementation of the European framework

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

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

  1. Asset Reference Tokens (ART): These tokens are pegged to a basket of diversified assets, aiming to provide increased stability.
  2. Electronic Money Tokens (EMT): A single official currency backs these tokens, making them preferred for everyday transactions.

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

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A cautious approach to the challenges of the crypto sector

The Bank of Italy maintains a posture of heightened 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 meet the essential attributes to assume the three fundamental functions of money: medium of exchange, store of value and unit of account.

As part of its regulatory strategy, Italy already has an arsenal of dissuasive sanctions in place. Offences ranging from market manipulation to insider trading could be punishable by fines of up to €5 million.

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

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