Digital euro is key to managing crypto risks as MiCA has had a limited impact on stablecoin adoption, says Bank of Italy chief Fabio Panetta.
Fabio Panetta, the former Governor of the Bank of Italy and a European Central Bank (ECB) official, advocated for the digital euro as a critical instrument for mitigating the risks associated with the growing adoption of cryptocurrencies.
On May 30, the Bank of Italy issued its annual report, which included the Governor’s concluding remarks regarding the economy.
Panetta stated that the European Union must advance the Central Bank digital currency (CBDC) initiative to accommodate the demand for secure digital payments and preserve financial stability.
Panetta cautioned that the systemic risks posed by crypto cannot be addressed solely through crypto regulation and that the digital euro would be essential in addressing them.
He stated, “We would be remiss to believe that crypto-assets evolution can be controlled only through rules and restrictions.”
Minimal Influence Of MiCA On EU Stablecoins
Panetta also discussed the influence of the EU’s crypto regulatory framework, the Markets in Crypto-Assets Regulation (MiCA), which was fully implemented in late 2024.
“Since MiCAR was implemented, the European Union has issued only a small number of EMT [electronic money token] stablecoins and their circulation has been restricted,” the Governor stated.
Additionally, he stated that MiCA has not stimulated any substantial stablecoin advancements 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.”
According to him, MiCA has urged businesses to report if they intend to apply for authorization to initiate crypto asset services or plan to do so.
Risks Associated With Foreign Platforms
Panetta argued that MiCA has not completely protected savers from the risks associated with “heterogeneity in regulatory approaches” globally, even though it has provided some protection to European investors.
“He stated that EU citizens may be at risk of being exposed to the failures of platforms or issuers in other jurisdictions that do not have the requisite transparency and operational safeguards or adequate controls.”
He emphasized the importance of enhanced international collaboration and encouraged the European Union to lead in establishing global regulatory standards.
Ultimately, That Appropriate Instrument Is Digital Euro
Panetta asserted that the sole solution to the evolving payment landscape was a digital euro that the central bank guaranteed, as it would provide the requisite trust and functionality.
“What is required is a response commensurate with the ongoing technological transformation, capable of satisfying the demand for secure, efficient, and accessible digital payment instruments while simultaneously safeguarding the role of central bank money,” he stated.
“This necessity is the precise impetus for the digital euro project.”
ECB Executive Board member Piero Cipollone has advocated for introducing a digital euro, citing the increasing popularity of US dollar stablecoins, which currently account for 97% of the stablecoin market.
Panetta’s remarks echo this agenda.
Panetta, previously an ECB’s Executive Board member, resigned in October 2023. Cipollone subsequently assumed his position.
Panetta’s report was released several weeks after Tether, the issuer of the world’s largest US dollar-pegged stablecoin, USDt, defended its decision to forgo MiCA registration for USDT in early May.
“The MiCA license is extremely perilous for stablecoins, and I think that it is even more perilous for the small and medium-sized banking system in Europe,” stated Paolo Ardoino, CEO of Tether, at the time.
