Key takeaways:
The Governor of the Bank of Italy stated that the central bank will make recommendations “in the coming days” regarding how to implement new EU crypto legislation.
The Bank of Italy, he pointed out, has discovered that only EMTs are entirely capable of carrying out the payment function while “preserving the public’s trust.”
Governor of the Bank of Italy Fabio Panetta stated that the central bank will make recommendations “in the coming days” regarding how to put new EU crypto legislation into effect.
An excerpt of Panetta’s July 9 speech to the Italian Banking Association states that the recommendations will be “aimed at facilitating an effective application” of the EU’s Markets in Crypto-Assets Regulation (MiCA) and to “protect the holders” of certain crypto.
According to Panetta, MiCA designates two main types of tokens as compliant with the standards to be utilized in payments: asset-reference tokens (ARTs) and electronic money tokens (EMTs).
The Bank of Italy, he pointed out, has discovered that only EMTs are entirely capable of carrying out the payment function while “preserving the public’s trust.”
The value of an ART is tied to one or more assets, such the gold-backed token PAX Gold (PAXG), whereas the value of an EMT is tied to a single official currency, like a stablecoin backed by the US dollar.
As instances of “unbacked crypto-assets,” Panetta cited Bitcoin and Ether, arguing that they “have no intrinsic value” and “are in effect akin to a gamble.”
He stated that investors in crypto may use them to “dodge tax rules or the regulations” put in place to combat money laundering and terrorist funding and that the “main objective” of these investors is to sell their assets at greater prices. He further added:
“Clearly, they do not possess the characteristics that make them suited to perform the three inherent functions of money: a means of payment, store of value, and unit of account,”
The number of “unbacked” crypto investors, according to Panetta, may not be aware that their risks are “low, but not negligible,” and that their numbers “may grow in the future.”
According to a Reuters story published in late June, the Italian government would be stepping up market surveillance in order to abide by MiCA.
Infractions ranging from insider trading to market manipulation would face fines of between 5,000 euros ($5,400) and 5 million euros ($5.4 million), according to a decree.
