Regulation
Italy to issue guidelines for implementing EU rules
Italy’s central bank is set to release guidelines for implementing the European Union’s new cryptocurrency regulations. Governor Fabio Panetta announced that the guidelines will aim to ensure the effective application of the EU Markets in Cryptocurrencies Regulation (MiCA), while protecting cryptocurrency holders.
Panetta’s speech to the Italian Banking Association outlined the risks and distinctions within the cryptocurrency market. He stressed the need for regulation, particularly for stablecoins, which are digital assets pegged to a portfolio of reserve assets such as currencies, deposits or securities.
Without strict regulation, these stablecoins could face ransoms if holders lose confidence. Unsecured cryptocurrencies like Bitcoin or Ethereum, with no intrinsic value or income generation, present significant risks due to their volatility and the opaque, informal networks on which they are often traded.
Risks and Categories in the Cryptocurrency Market
Highlighting the potential dangers, Panetta noted that these unsecured assets are often held by individuals seeking speculative gains, sometimes to evade tax and anti-money laundering regulations. Their value, often disconnected from fundamentals, can fluctuate wildly, making them unsuitable as a reliable means of payment, store of value or unit of account.
While they currently represent a small portion of the market, the share of unsupported crypto assets held by unsuspecting investors could grow, especially in emerging markets. The EU’s MiCA framework, which will be fully implemented this year, aims to mitigate these risks by setting specific rules for different types of digital tokens.
MiCA distinguishes between single-currency e-money tokens (EMTs), multi-asset asset reference tokens (ARTs), and unsupported digital assets. While EMTs and ARTs are considered stablecoins with strict regulatory requirements, unsupported assets and utility tokens are primarily subject to prior notification requirements.
Panetta said that these new regulations will finally bring the cryptocurrency market under control, although much remains to be done because the sector is too complex and rapidly changing. The risk of operating stablecoins on unreliable platforms, especially outside of Europe, would further underscore the need for traditional and non-traditional financial intermediaries to have strong financial and operational risk management.
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