The Italian Bank has warned that President Donald Trump’s aggressive driving force to normalize encryption could destroy the global financial system.
In a financial stability report released Tuesday, Roman officials said the growing support for US crypto assets, which makes it very important to future collapses hit banks, bond markets and the real economy, make them extremely important.
According to the bank’s report:
“Given the increasing interconnections between the digital asset ecosystem, the traditional financial sector and the real-world economy, the strong growth of Bitcoin and other crypto assets with high-priced volatility means not only investors but also risks to potential financial stability.”
They pointed out that it’s no longer just retail investors throwing money into the crypto. The link between the crypto and the old-fashioned financial world is tense enough to cause actual fallout if things go bad.
Italy raises more alarm than stubcoin risk after Trump encryption
The Italian Bank has revealed that Trump won in November and took office in January has opened Washington’s code lock. They emphasized that US lawmakers, who are on the momentum of the new administration, are in a hurry to establish a stable regulatory framework.
The Senate bill has enough support to move forward. The Italian Bank warned that this political environment could quickly track the integration of crypto into the mainstream.
European officials aren’t excited either. French François Villeroy des Garhau, policymakers for the European Central Bank, and Finland’s Oli Lane, expressed serious concern about the US’s mainstream code.
Lane said Monday that he is “very worried about the possibility of mainstreaming US crypto assets.” European officials fear that if stabrecoin, particularly the dollar-imposed, grows under the Trump clock, the ripple effects could smash the economy around the world.
The Italian Bank has flagged that in addition to dollar-backed coins, there are stub coins tied to euros and other assets. They warned that dollar-bound stubcoins are mostly stable, but the rest of the crypto market remains dangerously unstable.
The Italian central bank said the wobble in the wild prices of these assets indicates how badly things don’t work out if these equipment delve deeper into the traditional financial system. The Italian report also said:
“Following the introduction of a new US administration and the announcement of initiatives to promote the use of crypto assets, there has also been a temporary, but sharp rise in the global market prices for these products, including highly speculative products.”
They emphasized that the higher the overlap between crypto and regular finance, the more vulnerable the entire system.
Italy says a crash of stubcoin could collide with bonds and spread chaos
The Italian central bank nightmare scenario is a stable issuer who is falling apart. The report revealed that most major stubcoin issuers rely heavily on the short-term US Treasury Department to support the token. If one of these issuers collapses, it could unleash a crazy rush by holders scrambling for cash out.
“If one of the latter fails, there could be a rush to refund, and the sudden increase in requests for liquidation by holders, due to forced sales of reserve assets,” the report said.
The Italian Bank warned that US government bond markets would be slammed if anyone tried to sell their financial holdings right away. The stress will not stop. The shock collides with banks, funds and other important parts of the global economy. They drew a picture where one crypto crash could start a domino effect where no one was ready.
The Financial Stability Report also noted that it was one of the first because Trump’s tariffs caused severe market instability. Market tensions have been a bit chilly since April, but the Italian Bank said the risks are overall higher than before Trump took over. Their report clearly reminded us that even small policy moves could have far greater results thanks to how unstable everything has become.
