On 9 July, 2024, Bank of Italy Governor Fabio Panetta announced that the central bank will soon release guidelines to facilitate the implementation of the European Union’s Markets in Crypto-Assets Regulation (MiCA). These guidelines aim to ensure the effective application of MiCA and protect cryptocurrency holders, according to Panetta’s address to the Italian Banking Association.
Panetta detailed that MiCA categorizes tokens into two primary types suitable for payments: electronic money tokens (EMTs) and asset-referenced tokens (ARTs). However, the Bank of Italy’s assessment found that only EMTs can fully function as a means of payment while maintaining public trust. EMTs are linked to a single official currency, such as a US dollar-backed stablecoin, whereas ARTs are pegged to various assets like the gold-backed token PAX Gold (PAXG).
In his speech, Panetta emphasized the risks associated with unbacked crypto-assets, such as Bitcoin and Ethereum, which he described as having no intrinsic value and being akin to gambling. He noted that these assets do not meet the fundamental functions of money—means of payment, store of value, and unit of account—and are often used to evade tax regulations and anti-money laundering (AML) laws.
The forthcoming guidelines from the Bank of Italy are expected to address these concerns by providing a clear framework for the application of MiCA. This includes specific requirements for EMTs and ARTs and obligations for financial intermediaries involved in issuing or distributing these tokens. The guidelines will ensure that these intermediaries adhere to strict AML and terrorist financing regulations and that the technology used is robust and secure.
Panetta also pointed out that while the share of unbacked crypto-assets held by potentially unaware investors is currently low, it could grow in the future, especially in emerging markets. To mitigate these risks, the EU has adopted MiCA, which will be fully implemented by the end of this year. The Bank of Italy and Consob, Italy’s financial markets regulator, will oversee the enforcement of MiCA’s provisions.
This report from the Bank of Italy is poised to significantly shape the future of crypto assets in Italy. By implementing MiCA effectively, the central bank aims to bring order to the crypto-asset market, enhance investor protection, and ensure market stability. This move is expected to foster a safer and more transparent environment for both investors and financial institutions, encouraging the growth of legitimate crypto-related activities.
The Bank of Italy’s proactive approach, combined with the stringent oversight of financial intermediaries, highlights the efficiency of the Department of Justice (DOJ) and other regulatory bodies in catching and mitigating malicious activities within the crypto sphere. This dedication to maintaining financial integrity is crucial for the sustainable development of the digital asset market in Italy and beyond. (Source: https://www.youtube.com/watch?v=ooSL_IQX_3Y) (https://www.bancaditalia.it/pubblicazioni/interventi-governatore/integov2024/en-Panetta-ABI-20240709.pdf?language_id=1)
