Italy warns of systemic risk as US accelerates crypto integration under Trump
The Bank of Italy has issued a stark warning over the United States’ intensifying embrace of cryptocurrencies under President Donald Trump, cautioning that such moves could destabilise the global financial system.
In its newly released financial stability report, the Italian central bank expressed deep concern that the US political climate is hastening the mainstream adoption of digital assets. The report cautioned that the rapid expansion of crypto markets—particularly those marked by extreme volatility—poses not only risks to investors but could also ripple through the broader financial ecosystem.
“The strong growth of Bitcoin and of 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,” the Bank of Italy stated.
The report underscored how crypto is no longer confined to fringe investment circles. Increasingly, the ties between digital currencies and conventional financial institutions are tightening, raising the risk that a crypto market downturn could have real-world economic consequences.
Italy’s central bank attributed the recent surge in crypto-related activity to Trump’s electoral victory and his administration’s overt support for the sector. Since taking office in January, the Trump administration has signalled a strong commitment to integrating cryptocurrencies into the American financial system.
The report highlighted a flurry of legislative activity in Washington, where lawmakers aligned with the administration are pushing forward with new regulations for stablecoins. A bill currently in the Senate has gathered enough momentum to proceed, adding urgency to the Bank of Italy’s concerns.
European policymakers have echoed these warnings. Speaking earlier this week, Francois Villeroy de Galhau of France and Olli Rehn of Finland, both members of the European Central Bank’s governing council, voiced unease over the US’s crypto trajectory.
“I’m quite concerned about possible mainstreaming of cryptoassets in the US,” Rehn said bluntly on Monday, reinforcing the view that a globally integrated crypto market—especially one dominated by dollar-pegged stablecoins—could introduce systemic risks far beyond American borders.
The Bank of Italy noted that although some dollar-backed stablecoins have exhibited relative price stability, the broader crypto market remains highly speculative. The central bank also pointed to the emergence of stablecoins tied to the euro and other currencies, warning that their volatility could exacerbate financial fragility.
“After the new US administration took office and following the announcement of its initiatives to promote the use of crypto assets, there was also a temporary but sharp increase in global market prices for these products, including highly speculative ones,” the report said.
The bank’s most troubling scenario involves the potential collapse of a major stablecoin issuer. With many such firms relying heavily on short-term US Treasuries to back their digital tokens, a failure could prompt a mass sell-off and panic withdrawals—posing a serious threat to global markets.
As the overlap between the crypto world and traditional financial systems continues to grow, the Bank of Italy urged vigilance, warning that the deeper this integration becomes, the more vulnerable the entire system may be to shock.
Global Financial Stability at Stake as Crypto Meets Wall Street
The report concludes with a sobering message: the continued rise of cryptocurrencies, if left unchecked, could become a catalyst for global financial turbulence. As the Trump administration charts a pro-crypto path, European regulators are watching closely—and warily.
