The Bank of Italy has issued a stern warning that the growing adoption of crypto assets by the United States under President Donald Trump could pose significant global financial stability risks.
In its biannual financial stability report, the central bank flagged growing vulnerabilities linked to the growth of volatile digital assets and the widening ties between the crypto ecosystem and traditional finance.
“The strong growth of Bitcoin and other crypto assets with high price volatility poses risks not only to investors but also potentially to financial stability,” the report said, citing the growing interconnection between digital assets, traditional financial markets and the real economy.
Since Trump’s re-election and subsequent inauguration in January, U.S. lawmakers have stepped up efforts to regulate crypto, including legislation aimed at overseeing stablecoins, digital tokens pegged to the U.S. dollar. A stablecoin bill currently pending in the Senate is believed to have enough bipartisan support to advance.
The Bank of Italy noted that the surge in crypto prices, including highly speculative tokens, follows the new administration’s pro-crypto policy announcements. While some dollar-pegged stablecoins have maintained relative price stability, the broader crypto market remains highly volatile.
European Central Bank (ECB) officials echoed similar concerns. France’s François Villeroy de Galhau and Finland’s Olli Rehn warned against mainstream adoption of crypto assets. “I am quite concerned about the potential proliferation of crypto assets in the U.S.,” Rehn said on Monday.
The Italian central bank has also highlighted systemic risks associated with the widespread use of dollar-pegged stablecoins. These tokens are largely backed by short-term U.S. Treasury securities. The bank warned that if a major stablecoin issuer runs into trouble, the rush to repay the tokens could trigger a forced sale of reserve assets, potentially roiling U.S. government bond markets and creating spillover effects across global finance.
*This is not investment advice.
