Former European Central Financial institution (ECB) official and Governor of the Financial institution of Italy, Fabio Panetta, has touted the digital euro as a key device for controlling the dangers round rising cryptocurrency adoption.
The Financial institution of Italy, on Could 30, launched an annual report with the governor’s concluding remarks on the state of the financial system. Panetta mentioned the European Union should transfer ahead with the central financial institution digital foreign money (CBDC) undertaking to keep up monetary stability and meet demand for safe digital funds.
“We might be remiss to assume that the evolution of crypto-assets will be managed solely by means of guidelines and restrictions,” Panetta mentioned, warning that crypto regulation alone can’t handle the systemic dangers posed by crypto, and that the digital euro can be key to addressing them.
MiCA’s restricted influence on EU stablecoins
Panetta additionally addressed the influence of the EU’s crypto regulatory framework, the Markets in Crypto-Property Regulation (MiCA), which entered into full power in late 2024.
“Since MiCAR got here into power, just some EMT [electronic money token] stablecoins have been issued within the EU and their circulation is proscribed to this point,” the governor acknowledged.
He additionally mentioned MiCA has not fueled any important stablecoin developments in Italy:
“In Italy, there has to this point been little curiosity within the issuance of crypto-assets by supervised intermediaries and different operators, whereas a rising concentrate on custodial and buying and selling companies has been noticed.”
MiCA has inspired companies to report in the event that they plan to launch crypto asset companies or intend to use for authorization to take action, he added.
Dangers stemming from overseas platforms
Whereas providing some safety to European traders, MiCA has not totally safeguarded savers from the dangers related to “heterogeneity in regulatory approaches” globally, Panetta argued.
“EU residents is perhaps uncovered to failures of platforms or issuers primarily based in different jurisdictions that lack enough controls or the required transparency and operational safeguards,” he mentioned.
He referred to as for stronger worldwide cooperation and urged the EU to guide on establishing international regulatory requirements.
Digital euro is finally the precise device
Panetta argued that solely a digital euro, backed by the central financial institution, might supply the required belief and performance in a altering cost panorama:
“What is required is a response that matches the continued technological transformation, one able to assembly the demand for safe, environment friendly, and accessible digital cost devices, all whereas preserving the position of central financial institution cash,” he mentioned. “The digital euro undertaking stems exactly from this want.”
Panetta’s remarks echo the agenda promoted by ECB govt board member Piero Cipollone, who has advocated for the launch of a digital euro, citing the rising recognition of US greenback stablecoins, which now make up 97% of the complete stablecoin market.
Associated: Why Tether refuses to adjust to MiCA
Beforehand a member of the ECB’s govt board, Panetta resigned in October 2023, along with his place subsequently crammed by Cipollone.
Panetta’s report got here weeks after Tether, the issuer of the world’s largest US dollar-pegged stablecoin, USDt (USDT), defended its choice to skip MiCA registration for USDT in early Could.
“MiCA license could be very harmful in relation to stablecoins, and I consider that’s much more harmful for the small, medium banking system in Europe,” Tether CEO Paolo Ardoino mentioned on the time.
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