The use of cryptocurrency has seen a significant increase in Italy where more and more users are using this virtual currency as a payment option. These cryptocurrencies’ growth has become a real worry as it can damage the market in this country.
Actually, any regulation has not yet been established there and with crypto rising to a $1.6 trillion market, the appropriate regulations are vital. As the European Union takes too long to establish a region-wide set of laws, Italy plans to regulate its own crypto market.
A Proper Oversight is Crucial
While some countries have consistent laws overseeing cryptocurrencies, others are working on regulating these activities. This is clearly the case of Italy that is cautious about the cryptocurrencies growth which is alarming. As stated by Paolo Savona, Italy’s stock market regulator head and the chairman of the Commissione Nazionale per le Società e la Borsa (Consob) “the lack of firm regulatory standards was disquieting”.
With the unregulated cryptocurrency market, the financial watchdog raises concerns. The chairman of Italy’s financial regulator also affirmed that without proper oversight, there could be a worsening in market transparency, the basis of legality, and rational choice for market operators. The chairman also warned that cryptocurrencies could be used in several criminal activities including money laundering, kidnapping, funding terrorism, tax evasion, and more.
Paolo Savona made this decision known during the annual report on June 14, 2021. He added that the absence of clear regulations is an opportunity for criminals to use crypto for illegal activities. “There are 4,000-5,000 cryptocurrencies in circulation which have any form of real regulation”, the Consob chairman noted. “If we add to this Consob’s recent own experience in closing down in Italy hundreds of websites illegally gathering savings, the picture that emerges is worrying”, he added.
Lack of Definitive Policies for the Crypto-economy
Paolo Savona has joined the initiative to regulate cryptocurrencies to avoid virtual currency crimes although there are several research studies indicating that crypto criminality only accounts for a minute proportion of global cryptocurrency commerce.
Mohamed El-Erian, chief economic adviser at Allianz also indicated during the CNBC Squawk Box program the emerging narrative and called it “a tug of war between adoption and regulation.” Moreover, as reported by Savona, the cryptocurrencies’ proliferation is a threat to the central banks’ ability to facilitate the sovereign monetary policies of their respective nations.
In addition to that, criminals using crypto for money laundering and tax evasion are also the problem caused by this increase. The slow pace of the regulation regarding cryptocurrency at the European Union level was criticised by the securities regulator. Therefore, Italy is forced to set up its own cryptocurrency regulatory system as there are lots of Italians who use non ADM sites listed at NonAAMS and bet on games using different cryptocurrencies.
Regulation Instead of Prohibition
Some countries have left the plans for a crypto payments ban. One of them is India that has moved away from plans for a complete prohibition. The government there suggested that it would not impose a complete prohibition on cryptocurrency. Instead of a ban, a report promises that the government should appoint a group of experts to study the regulation of virtual coins. It is also the case of the Netherlands that has also implemented the system of supervision instead of the prohibition of cryptocurrencies.
As stated by the Dutch finance minister Wopke Hoekstra, a cryptocurrency ban was not the right solution for the Netherlands. “Supervision would be preferable”, Hoekstra confidently added. As far as the case of El Salvador, it became the first country in the world to regulate Bitcoin. Despite a lot of critics, this decision to vote cryptocurrency as legal tender pleased the currency’s supporters. Italy plans to follow El Salvador’s policy to introduce laws to regulate cryptocurrency.
Each country has its own approaches when regulating cryptocurrencies. While some call for a complete ban for all activities involving cryptocurrencies, others want to regulate these digital currencies. Italy worries about the spread of cryptocurrencies there without any obvious regulation.
The chairman of Italy’s stock market regulator, Paolo Savona has raised alarms over crypto’s proliferation and the urgent need for firm regulatory standards. Italy is, thus, planning to create its own cryptocurrencies regulation because European Union takes too long to develop common laws.