Too Much Power, Too Few Rules: Italy Sounds Crypto Warning

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Written by Aaron S.,

Editor-In-Chief

Last Updated: April 30, 2025

Key Takeaways

Italy’s central bank warns that tighter crypto–finance links could increase risks in traditional markets;
Stablecoins backed by US bonds may trigger large sell-offs if mass redemptions occur;
Most major crypto firms are based in the US, which raises concerns about EU oversight and financial control.

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The Bank of Italy has issued a new warning about the growing ties between cryptocurrencies and traditional finance.

Italy's central bank stated in its April 2025 Financial Stability Report that these links are becoming stronger, as digital asset prices have surged following the US election of Donald Trump.

The bank is worried that as crypto becomes more connected with regular financial systems, it could create risks that are harder to manage.

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Sudden price swings in crypto markets might start to affect regular investments, especially with more companies holding Bitcoin BTC $103,173.21 through exchange-traded funds (ETFs) or as part of their business reserves.

The report pointed out that by the end of March, the global crypto market had reached $2.75 trillion. Bitcoin made up most of that value—over 60%—while other unbacked digital tokens added another 30%. Only about 9% came from stablecoins, which are usually tied to traditional currencies like the US dollar.

One section of the report focuses on the potential problems tied to stablecoins. The Bank of Italy noted that many of these tokens are backed by US government bonds. If too many people tried to redeem their stablecoins at once, it could force large-scale sales of those bonds.

The bank also warned that euro-denominated stablecoins issued by non-European companies could weaken the EU’s control over its own financial systems.

Another issue raised was the concentration of control in the hands of a few companies. The report noted that most major crypto firms, including exchanges and platforms that hold large amounts of Bitcoin, are based in the United States.

Caitlin Long, CEO and founder of Custodia Bank, recently raised concerns about the US Federal Reserve’s handling of crypto regulations. Why? Read the full story.