Italy launches "in-depth review" of cryptocurrency risks, signaling stricter regulation

Italy has officially launched a “deep review” targeting retail investors’ exposure to crypto assets, marking a further escalation in European regulators’ focus on digital asset risks. Led by the Ministry of Economy and Finance, the initiative aims to assess investor protection mechanisms in both direct and indirect crypto investments and to address potential risk gaps caused by fragmented global regulation.

The Italian Macroprudential Policy Committee (composed of the central bank, insurance and pension regulators, and the finance ministry) warned that as the ties between crypto assets and the traditional financial system grow stronger, while international regulatory standards become increasingly fragmented, systemic risks could expand. These concerns are particularly pronounced as the digital asset market capitalization surpasses $3 trillion and US policy clearly shifts toward a “crypto-friendly” stance.

Ruchir Gupta, co-founder of Gyld Finance, pointed out that differences in cross-border regulation can push high-risk activities toward jurisdictions with weaker oversight, creating “real financial blind spots.” He expects that as the US regulatory path becomes clearer, the world may see “substantial convergence” before 2026, and Italy’s current review reflects that regulators no longer see crypto as a marginal risk but are incorporating it into the financial stability framework.

The Bank of Italy previously issued warnings that the global integration of crypto markets and rapid price increases (especially following Trump’s election win) could heighten vulnerabilities in the traditional financial system. It also emphasized governance flaws, conflicts of interest, and the excessive concentration of activity in the US market.

Nitesh Mishra, CTO of ChaiDEX, stated that Europe is entering a stricter phase of crypto regulation, and the full implementation of the Markets in Crypto-Assets Regulation (MiCA) will further strengthen licensing, capital requirements, and anti-money laundering rules. He noted that although tighter regulation will raise compliance costs, companies will benefit from regulatory clarity, EU passporting advantages, and a more trustworthy competitive position in global markets.

Industry insiders unanimously agree that rigorous reviews and unified compliance frameworks could attract established companies to prioritize the European market, while providing retail investors with a safer investment environment. (Decrypt)