Italian Sounds Alarm Over Trump’s Embrace of Cryptocurrency

• Italy’s national bank has expressed deep concern over U.S. President Donald Trump’s pro-cryptocurrency policies.
• Italy warns that crypto firms could exploit regulatory differences between the U.S. and the EU, pushing for stronger safeguards to protect the financial system.

During his 2024 campaign and well into his presidency, U.S. President Donald Trump has positioned himself as a vocal advocate for cryptocurrency. Promising to reverse the regulatory crackdown initiated under Joe Biden, Trump has pledged to transform the United States into the crypto capital of the world. But not everyone is as excited as he is, least of all Italy.

In its April 2025 Financial Stability Report, the Bank of Italy cautioned against the implications of Washington’s adoption of crypto. The report observes a sharp, but short-lived, spike in worldwide crypto asset prices after Trump’s pro-crypto policy pronouncements.

“After the new US administration took office and following the announcement of its initiatives to promote the use of crypto-assets,” the report states, “there was also a temporary but sharp increase in global market prices for these products, including highly speculative ones.”

Bitcoin and the Risk of Financial Spillover

The Bank finds that the connection of highly volatile cryptocurrencies like Bitcoin (BTC) with other conventional financial institutions poses important system risks. Several non-financial companies now have Bitcoin within their cash pools as a speculative asset employed to underpin equities’ prices, but the strategy exposes them to extreme volatility.

Simultaneously, the integration of crypto markets, banks, and the real economy can potentially develop new channels for financial contagion. This is a development that raises the likelihood of more widespread market disruption in the event of sharp reversals in crypto markets.

Particular concern was raised about the dominance of USD-pegged stablecoins like Tether (USDT) and USD Coin. While currently limited in scope, the sector is highly concentrated and vulnerable to systemic shocks. If stablecoins continue to grow, the Bank cautions that they would misshape global financial flows and destabilize government bond markets. “A scenario in which dollar-pegged stablecoins became systemic could lead to exceptional demand for US government bonds, which are used as reserve assets by issuers,” the report reads.

The Bank’s concerns reflect a growing sense of unease across Europe. The rise of dollar-backed stablecoins isn’t just a technical issue; it could gradually push out euro-based payment options and chip away at Europe’s ability to manage its monetary future.

The bank stated, “In the euro area, the possible large-scale spread of payment instruments and services based on euro-denominated stablecoins offered by US firms or banks might also have implications for the smooth functioning of payment systems and for monetary sovereignty itself.”

The report also notes that global regulatory frameworks remain highly fragmented. While the European Union is advancing oversight of digital assets, several draft laws regarding stablecoins are still pending in the U.S. Congress, adding to the uncertainty.

In February, CNF reported that Italy’s not just ringing the alarm bells, it’s actually doing something about it. Italy is stepping up its crypto regulations to defend against financial instability and money laundering. As part of the crackdown, they are planning to impose massive fines, up to $5.4 million for offenses like market manipulation and insider trading.