Bank of Italy calls for strict measures against stablecoins

The central bank of Italy raised alarm over the surging interference of stablecoins in the traditional financial sector.

Italy is a European Union (EU) country and crypto trading is legal in this country. Under the current regulatory measures, crypto Investors are required to pay 14% to 26% tax against the crypto investment profit. Within the next couple of years, Italy will adopt a new crypto regulation framework, as MiCA (the Markets in Crypto Assets), a crypto-dedicated bill, will come into effect across all the EU member countries in phases 2024-2025.

Recently the Bank of Italy published its Markets, Infrastructures and Payment Systems report and called the country’s regulators to introduce strict measures against stablecoins issuers.

#Bankitalia #26June Alessandra #Perrazzelli discussed about the evolving regulatory landscape for #DigitalAssets at @pointzeroforum Panel “State of Global Digital Asset Regulation: Navigating Opportunities in an Evolving Landscape”#PZF2023 #PointZeroForum @sif_sfi @elevandi pic.twitter.com/Jm0OBeifZh

— Banca d'Italia (@bancaditalia) June 26, 2023

According to the Central Bank, the surging popularity of cryptocurrencies & stablecoins with several ups & downfalls causing big harm to the citizens.

According to the bank, close & strict regulatory measures on the stablecoins is a very necessary thing, as these stablecoins are playing a vital role to boost the Decentralised Finance (Defi) sector.

The adoption of #DLT solutions, especially if featured by weak organizational structures, could undermine the financial system due to lack of controls, lack of specific rules as mitigation tools, interdependence among regulated and non-regulated entities. The fragmentation is…

— Banca d'Italia (@bancaditalia) June 27, 2023

Furthermore, the report also noted that the majority of the crypto firms (stablecoin issuers & crypto trade platforms) are not decentralised enough, instead they control the majority of the financial activities & they are actual players who extract profit from the retail & smaller investors.

Bank asserted that regulators don’t need to bring attention to every type of crypto-related activity, e.g. the use of crypto & blockchain networks in decentralised identification, real estate, supply chain, voting, and carbon credits.

In particular, the Bank suggested targeting crypto & stablecoins activities involving payment services.

It is worth it to note that a similar kind of statement was also passed by the Indian Central Bank (RBI) which addresses the negative impact of the stablecoins emerging market.

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