Digital euro, not MiCA, key to manage crypto risks: Bank of Italy chief

Former European Central Bank (ECB) official and Governor of the Bank of Italy, Fabio Panetta, touted the digital euro as a key tool for controlling the risks of increasing cryptocurrency adoption.

The Bank of Italy, on May 30, released an annual report with the governor’s concluding remarks on the state of the economy. Panetta said the European Union must move forward with the central bank digital currency (CBDC) project to maintain financial stability and meet demand for secure digital payments.

“We would be remiss to think that the evolution of crypto-assets can be controlled only through rules and restrictions,” Panetta said, warning that crypto regulation alone cannot address the systemic risks posed by crypto, and that the digital euro would be key to addressing them.

MiCA’s limited impact on EU stablecoins

Panetta also addressed the impact of the EU’s crypto regulatory framework, the Markets in Crypto-Assets Regulation (MiCA), which entered into full force in late 2024.

“Since MiCAR came into force, only some EMT [electronic money token] stablecoins have been issued in the EU and their circulation is limited so far,” the governor stated.

He also said MiCA has not fueled any significant stablecoin developments in Italy:

“In Italy, there has so far been little interest in the issuance of crypto-assets by supervised intermediaries and other operators, while a growing focus on custodial and trading services has been observed.”

MiCA has encouraged businesses to report if they plan to launch crypto asset services or intend to apply for authorization to do so, he added.

Risks stemming from foreign platforms

While offering some protection to European investors, MiCA has not fully safeguarded savers from the risks associated with “heterogeneity in regulatory approaches” globally, Panetta argued.

“EU citizens might be exposed to failures of platforms or issuers based in other jurisdictions that lack adequate controls or the necessary transparency and operational safeguards,” he said.

He called for stronger international cooperation and urged the EU to lead on establishing global regulatory standards.

Digital euro is ultimately the right tool

Panetta said that only a digital euro, backed by the central bank, could offer the necessary trust and functionality in a changing payment landscape:

“What is needed is a response that matches the ongoing technological transformation, one capable of meeting the demand for secure, efficient, and accessible digital payment instruments, all while preserving the role of central bank money,” he said. “The digital euro project stems precisely from this need.”

Panetta’s remarks echo the agenda promoted by ECB Executive Board member Piero Cipollone, who has advocated for the launch of a digital euro, citing the growing popularity of US dollar stablecoins, which now make up 97% of the entire stablecoin market.

Related: Why Tether refuses to comply with MiCA

Previously a member of the ECB’s Executive Board, Panetta resigned in October 2023, with his position subsequently filled by Cipollone.

Panetta’s report came weeks after Tether, the issuer of the world’s largest US dollar-pegged stablecoin, USDt (USDT), defended its decision to skip MiCA registration for USDT in early May.

“MiCA license is very dangerous when it comes to stablecoins, and I believe that is even more dangerous for the small, medium banking system in Europe,” Tether CEO Paolo Ardoino said at the time.

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