Bank of Italy warns crypto risks grow amid Trump’s US influence

The Bank of Italy has issued a warning about the growing systemic risks posed by cryptocurrencies, highlighting concerns over their increasing integration with traditional finance and the influence of the Trump administration’s pro-crypto policies.  

In its April 2025 Financial Stability Report, the central bank noted that the rapid rise in digital asset prices since Donald Trump’s election and the administration’s crypto-friendly stance have heightened vulnerabilities in global financial markets.  

“If these instruments were to become more closely entwined with the traditional financial system, there could be greater vulnerabilities for markets and intermediaries,” the report stated.  

The global crypto market was valued at approximately $2.75 trillion by the end of March 2025, with Bitcoin (CRYPTO:BTC) accounting for over 60% of this value.

Stablecoins, mostly pegged to the U.S. dollar, made up about 9% of the market.  

The Bank of Italy expressed concern over the concentration of crypto power in a few U.S.-based firms, which hold a significant portion of Bitcoin and operate without specific governance requirements, increasing potential conflicts of interest. 

The report also warned about the systemic risks posed by dollar-backed stablecoins such as Tether’s (CRYPTO:USDT) USDT and Circle’s (CRYPTO:USDC) USDC.

A large-scale redemption run on these stablecoins could trigger forced sales of U.S. government bonds, potentially destabilising global markets and undermining monetary sovereignty in the euro area.  

Despite these cautions, Italy’s commercial bank, Intesa Sanpaolo, purchased 11 bitcoins worth about €1 million in January 2025 and has been active in blockchain initiatives, illustrating a divergence between regulatory concerns and some institutional actions.  

“The strong growth of Bitcoin and other crypto-assets with high price volatility means risks not only for investors but also potentially for financial stability, given the growing interconnections between the digital asset ecosystem, the traditional financial sector and the real economy,” according to the report.