Urgent: Digital Euro, Not MiCA, Key to Manage Crypto Risks, Says Bank of Italy Chief

Is regulating crypto enough? The head of Italy’s central bank doesn’t think so. Fabio Panetta, Governor of the Bank of Italy, has made a compelling case that the planned Digital Euro is a more crucial tool than existing regulations like MiCA for effectively controlling the inherent Crypto Risks associated with the growing adoption of digital assets.

Why Regulation Like MiCA Isn’t Sufficient Alone

Panetta, a former European Central Bank (ECB) official, recently shared his views in the Bank of Italy’s annual report. While acknowledging the importance of frameworks like the Markets in Crypto-Assets Regulation (MiCA), which fully came into force in late 2024, he suggested its impact on domestic development has been less than anticipated.

• Panetta noted that since MiCA’s implementation, only a limited number of electronic money token (EMT) Stablecoins have been issued within the EU.
• Their circulation remains restricted.
• In Italy specifically, there’s been minimal interest from supervised financial institutions in issuing crypto assets, with focus remaining on custodial and trading services.

This limited uptake suggests that while MiCA provides a framework, it hasn’t yet spurred widespread, compliant stablecoin adoption within the Eurozone as some might have hoped. Panetta’s statement underscores a belief that regulation, while necessary, doesn’t fully address the systemic challenges posed by crypto.

Addressing Crypto Risks from Foreign Platforms

Panetta also highlighted a significant gap in protection under current regulations. While MiCA aims to safeguard European investors dealing with EU-based entities, it offers less protection when citizens interact with platforms or issuers located outside the EU.

These foreign platforms may operate under less stringent regulatory environments, potentially exposing EU citizens to failures or lack of transparency. Panetta stressed the need for enhanced international cooperation to establish consistent global regulatory standards, urging the EU to take a leading role in this effort.

The Bank of Italy’s Stance: The Digital Euro is the Answer

According to the Bank of Italy chief, the fundamental issue is maintaining financial stability and meeting the public’s demand for secure digital payment options in an evolving landscape. He argues that only a central bank-backed Digital Euro can provide the necessary foundation of trust and functionality.

Panetta believes the Digital Euro project directly addresses this need by offering a secure, efficient, and accessible digital payment instrument that preserves the crucial role of central bank money in the financial system. This perspective aligns with other ECB officials, like Piero Cipollone, who have also advocated for the Digital Euro, partly in response to the dominance of US dollar-pegged stablecoins globally.

Conclusion: A Call for the Digital Euro

Fabio Panetta’s remarks deliver a clear message: while regulation like MiCA is a step, it’s not the complete solution for managing Crypto Risks. The limited impact on EU Stablecoins adoption post-MiCA, coupled with the risks from foreign platforms, strengthens the argument for a robust, central bank-issued Digital Euro. The Bank of Italy‘s view positions the Digital Euro not just as a payment innovation, but as a critical tool for financial stability in the digital age.