Digital Euro: Italy’s Central Bank Chief Says It’s Key to Managing Crypto Risks, Not Just MiCA

%3Cp%3EFabio%20Panetta%2C%20former%20European%20Central%20Bank%20(ECB)%20official%20and%20Governor%20of%20the%20Bank%20of%20Italy%2C%20touted%20the%20digital%20euro%20as%20a%20key%20tool%20for%20controlling%20the%20risks%20of%20increasing%20cryptocurrency%20adoption.%3C%2Fp%3E%3Cp%3EThe%20Bank%20of%20Italy%2C%20on%20May%2030%2C%20released%20an%20annual%20report%20with%20the%20governor%E2%80%99s%20concluding%20remarks%20on%20the%20state%20of%20the%20economy.%20Panetta%20said%20the%20European%20Union%20must%20move%20forward%20with%20the%20central%20bank%20digital%20currency%20(CBDC)%20project%20to%20maintain%20financial%20stability%20and%20meet%20demand%20for%20secure%20digital%20payments.%3C%2Fp%3E%3Cp%3E%26ldquo%3BWe%20would%20be%20remiss%20to%20think%20that%20the%20evolution%20of%20crypto-assets%20can%20be%20controlled%20only%20through%20rules%20and%20restrictions%2C%26rdquo%3B%20Panetta%20said%2C%20warning%20that%20crypto%20regulation%20alone%20cannot%20address%20the%20systemic%20risks%20posed%20by%20crypto%2C%20and%20that%0Athe%20digital%20euro%20would%20be%20key%20to%20addressing%20them.%3C%2Fp%3E%3Ch2%3EMiCA%E2%80%99s%20limited%20impact%20on%20EU%20stablecoins%3C%2Fh2%3E%3Cp%3EPanetta%20also%20addressed%20the%20impact%20of%20the%20EU%E2%80%99s%20crypto%20regulatory%20framework%2C%20the%20Markets%20in%20Crypto-Assets%20Regulation%20(MiCA)%2C%20which%20entered%20into%20full%20force%20in%20late%202024.%3C%2Fp%3E%3Cp%3E%26ldquo%3BSince%20MiCAR%20came%20into%20force%2C%20only%20some%20EMT%20%5Belectronic%20money%20token%5D%20stablecoins%20have%20been%20issued%20in%20the%20EU%20and%20their%20circulation%20is%20limited%20so%20far%2C%26rdquo%3B%20the%20governor%20stated.%3C%2Fp%3E%3Cp%3EHe%20also%20said%20MiCA%20has%20not%20fueled%20any%20significant%20stablecoin%20developments%20in%20Italy%3A%3C%2Fp%3E%3Cblockquote%3E%3Cp%3E%26ldquo%3BIn%20Italy%2C%20there%20has%20so%20far%20been%20little%20interest%20in%20the%20issuance%20of%20crypto-assets%20by%20supervised%20intermediaries%20and%20other%20operators%2C%20while%20a%20growing%20focus%20on%20custodial%20and%20trading%20services%20has%20been%20observed.%26rdquo%3B%3C%2Fp%3E%3C%2Fblockquote%3E%3Cp%3EMiCA%20has%20encouraged%20businesses%20to%20report%20if%20they%20plan%20to%20launch%20crypto%20asset%20services%20or%20intend%20to%20apply%20for%20authorization%20to%20do%20so%2C%20he%20added.%3C%2Fp%3E%3Ch2%3ERisks%20stemming%20from%20foreign%20platforms%3C%2Fh2%3E%3Cp%3EWhile%20offering%20some%20protection%20to%20European%20investors%2C%20MiCA%20has%20not%20fully%20safeguarded%20savers%20from%20the%20risks%20associated%20with%20%26ldquo%3Bheterogeneity%20in%20regulatory%20approaches%26rdquo%3B%20globally%2C%20Panetta%20argued.%3C%2Fp%3E%3Cp%3E%26ldquo%3BEU%20citizens%20might%20be%20exposed%20to%20failures%20of%20platforms%20or%20issuers%20based%20in%20other%20jurisdictions%20that%20lack%20adequate%20controls%20or%20the%20necessary%20transparency%20and%20operational%20safeguards%2C%26rdquo%3B%20he%20said.%3C%2Fp%3E%3Cp%3EHe%20called%20for%20stronger%20international%20cooperation%20and%20urged%20the%20EU%20to%20lead%20on%20establishing%20global%20regulatory%20standards.%3C%2Fp%3E%3Ch2%3EDigital%20euro%20is%20ultimately%20the%20right%20tool%3C%2Fh2%3E%3Cp%3EPanetta%20said%20that%20only%20a%20digital%20euro%2C%20backed%20by%20the%20central%20bank%2C%20could%20offer%20the%20necessary%20trust%20and%20functionality%20in%20a%20changing%20payment%20landscape%3A%20%3C%2Fp%3E%3Cp%3E%26ldquo%3BWhat%20is%20needed%20is%20a%20response%20that%20matches%20the%20ongoing%20technological%20transformation%2C%20one%20capable%20of%20meeting%20the%20demand%20for%20secure%2C%20efficient%2C%20and%20accessible%20digital%20payment%20instruments%2C%20all%20while%20preserving%20the%20role%20of%20central%20bank%20money%2C%26rdquo%3B%20he%20said.%20%26ldquo%3BThe%20digital%20euro%20project%20stems%20precisely%20from%20this%20need.%26rdquo%3B%3C%2Fp%3E%3Cp%3EPanetta%E2%80%99s%20remarks%20echo%20the%20agenda%20promoted%20by%20ECB%20Executive%20Board%20member%20Piero%20Cipollone%2C%20who%20has%20advocated%20for%20the%20launch%20of%20a%20digital%20euro%2C%20citing%20the%20growing%20popularity%20of%20US%20dollar%20stablecoins%2C%20which%20now%20make%20up%2097%25%20of%20the%20entire%20stablecoin%20market.%3C%2Fp%3E%3Cp%3EPreviously%20a%20member%20of%20the%20ECB%E2%80%99s%20Executive%20Board%2C%20Panetta%20resigned%20in%20October%202023%2C%20with%20his%20position%20subsequently%20filled%20by%20Cipollone.%3C%2Fp%3E%3Cp%3EPanetta%E2%80%99s%20report%20came%20weeks%20after%20Tether%2C%20the%20issuer%20of%20the%20world%E2%80%99s%20largest%20US%20dollar-pegged%20stablecoin%2C%20USDt%20(USDT)%2C%20defended%20its%20decision%20to%20skip%20MiCA%20registration%20for%20USDT%20in%20early%20May.%3C%2Fp%3E%3Cp%3E%26ldquo%3BMiCA%20license%20is%20very%20dangerous%20when%20it%20comes%20to%20stablecoins%2C%20and%20I%20believe%20that%20is%20even%20more%20dangerous%20for%20the%20small%2C%20medium%20banking%20system%20in%20E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