Catenaa, Thursday, May 08, 2025-The Bank of Italy has warned that the growing integration of cryptocurrency with traditional finance poses systemic risks, highlighting US President Donald Trump’s crypto-friendly stance as a contributing factor to rising market instability.
In its semiannual Financial Stability Report released Thursday, the central bank cautioned that digital assets’ deeper links to banks and financial institutions could amplify market volatility and endanger economic resilience.
Officials said Trump’s policies—marked by reduced oversight and enthusiastic support for crypto—helped fuel the current boom in asset prices.
The global crypto market is now valued at $2.75 trillion, with Bitcoin making up more than 60%, the report said. The bank also flagged concerns over the concentration of power among a few dominant US firms that control a large portion of Bitcoin, citing risks of governance failures and lack of regulatory supervision.
Additionally, the Bank of Italy warned of the fragility posed by dollar-backed stablecoins such as Tether (USDT) and USDC. A mass exit from these assets could trigger liquidity shocks and broader financial turmoil, the report noted.
Despite the warnings, major Italian lender Intesa Sanpaolo has embraced crypto, making its first direct Bitcoin acquisition in January and expanding its presence in blockchain-based services. Some Italian lawmakers have also urged for increased national investment in digital assets.
The report underscores growing tension between traditional regulatory caution and accelerating institutional adoption of crypto across Europe.
