Bank of Italy’s Panetta insists CBDC, not MiCA key to stablecoin compliance in Europe

Fabio Panetta, the Governor of the Bank of Italy and a former European Central Bank (ECB) official, has stated that Europe’s crypto stability depends on a central bank digital currency (CBDC) and not just MiCA regulations. 

Fabio Panetta shared his comments as part of the Bank of Italy’s annual report , distributed on May 30, 2025, reinforcing his view that the European Union’s existing regulatory framework, the Markets in Crypto-Assets Regulation (MiCA), is not enough to address the growing risks of cryptocurrency adoption.

When it came into full effect in 2024, MiCA was praised as a significant step toward the structured supervision of crypto markets. In his statement, Panetta suggested that MiCA’s impact has been minimal, especially in the area of compliant stablecoin development.

MiCA’s limited influence

According to Panetta, the dry response to MiCA regulations shows that rules alone won’t create a trusted digital asset ecosystem in Europe. The real solution would be to develop a central bank-backed digital currency.

“What is needed is a response that matches the ongoing technological transformation,” he said. “The digital euro project stems precisely from this need.”

Panetta’s report also stated that while MiCA offers protection for some investors, crypto platforms operating outside Europe could still pose significant threats. “EU citizens might be exposed to failures of platforms or issuers based in other jurisdictions that lack adequate controls or the necessary transparency and operational safeguards,” he said.

Without international cooperation and alignment on regulatory standards, the EU’s efforts to reduce financial risks will remain incomplete. Panetta urged European lawmakers to take the lead in pushing for coordinated global crypto rules.

U.S.-backed tokens like USDT and USDC currently account for about 97% of the global stablecoin market. Panetta expressed his concern that banks could face reputational risks if they become involved in crypto services without proper safeguards.

“Crypto-asset holders might not fully understand their nature and conflate them with traditional banking products,” he warned, “with potentially negative repercussions for confidence in the credit system should losses occur.”

Despite Panetta’s warning, Italy’s largest bank, Intesa Sanpaolo, has already started experimenting with digital assets. In January 2025, it reportedly purchased €1M in bitcoin, after the launch of its crypto trading desk in 2023.

Spain’s Santander is also exploring a stablecoin product and has expanded its access to digital assets for customers of its online banking services.

Panetta also warned against the idea of restricting crypto as a way to slow its spread. “We would be remiss to think that the evolution of crypto-assets can be controlled only through rules and restrictions,” he said.

Instead, he believes the public sector must offer a viable alternative, such as the digital euro.

Panetta sells out for a euro CBDC

While Panetta argues that the MiCA regulation is not enough, there is some controversy surrounding the stablecoin issuer Tether, which openly refused to register its token, USDT, under MiCA in early May.

Tether’s CEO, Paolo Ardoino, labeled MiCA as “very dangerous,” claiming that its rules could negatively affect smaller and mid-sized European banks.

“MiCA license is very dangerous when it comes to stablecoins, and I believe that is even more dangerous for the small, medium banking system in Europe,” he said

The Bank of Italy governor’s remarks also align with the ECB’s ambition to release a digital euro by the end of the decade. The digital euro, Panetta said, is about protecting the role of central bank money in the rapidly evolving financial industry.

“Only a central bank digital currency,” he said, “can ensure monetary anchors remain intact while meeting modern payment demands.”

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