Crypto regulation gap: Bank of Italy warns on global fragmentation
Sergio Nicoletti Altimari from the Bank of Italy warned at the Roma Tre – UNIDROIT Centre's conference about the diverging paths of crypto regulation across jurisdictions, leading to risks for stability and market integrity. He highlighted significant differences in regulatory approaches, especially in stablecoin regulations between Europe's MiCAR and U.S. laws, which complicate cross-border rules and global crypto regulation. Altimari cautioned that fragmented responses could undermine financial stability and amplify risks within the crypto market. He advocated for 'soft harmonization' and transnational law to foster regulatory convergence, promote market efficiency, and strengthen financial stability. He emphasized the need for aligned global regulations, international cooperation, and consistent frameworks to enhance trust and reduce fragmentation in Europe and globally.
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Divergence in Crypto Regulation
At the Roma Tre – UNIDROIT Centre, Sergio Nicoletti Altimari, Deputy Director General of the Bank of Italy, highlighted concerns about regulatory divergence in crypto markets. Speaking at the second Annual Conference of the Roma Tre – UNIDROIT Centre, he stated that "the rapid growth of crypto-assets clearly illustrates the tensions" when innovation outpaces regulation. Altimari contrasted Europe's MiCAR framework with the Genius Act in the United States, noting that "other jurisdictions are moving in still different directions."
Stablecoins and Cross-Border Regulation
Altimari emphasized the significant differences in regulatory approaches to stablecoins, particularly between Europe's Regulation (EU) 2023/1114 and the recently adopted U.S. measures. He warned that in an interconnected market, such divergence complicates cross-border crypto rules, posing serious challenges to global crypto regulation. "Fragmented responses risk undermining both stability and confidence," he said, adding that "this lack of alignment is suboptimal and can generate serious problems."
Risks of Fragmented Responses
According to Altimari, fragmented regulatory frameworks undermine financial stability and market integrity, particularly when crypto instruments operate outside robust oversight mechanisms. These risks extend beyond stablecoins and impact crypto exchange regulation and cross-border enforcement. He highlighted Europe’s vulnerability, noting that the region's deep integration in financial and production networks amplifies the negative spillovers from uneven regulations.
The Role of Soft Harmonization
Altimari urged the adoption of tools promoting 'transnational' private and commercial law, which can enhance market efficiency and contribute to global financial stability. He explained that where formal harmonization is complex, soft harmonization offers a "valuable complementary role," fostering shared standards and convergence. Additionally, he called for strengthening international cooperation to defend openness and ensure legal certainty.
Call for Coordinated Action
Altimari's central message was unmistakable: the global crypto market needs aligned regulatory frameworks, particularly for stablecoins, to reduce financial fragmentation in Europe. He stressed the importance of consistent global rules and dialogue to stabilize markets and enhance trust. Ultimately, coordinated international action remains essential for effective and coherent crypto regulation.