Bank of Italy Warns Cryptocurrency Growth Poses Risks to Investors and Stability

The Bank of Italy highlights risks from the rise of cryptocurrencies like Bitcoin in its latest report, tying volatility and corporate investments to possible financial instability. Concerns about stablecoins and their potential systemic risks were also raised, coinciding with warnings from Italy’s finance minister on US dollar-linked tokens.

The Bank of Italy has sounded alarms over the rapid rise of cryptocurrency, particularly Bitcoin, in its latest Financial Stability Report. Published in April 2025, the report pinpoints several problems arising from crypto’s increasing volatility and its deepening links with the traditional economy, affecting investors and financial security alike.

In the report, the Bank articulated concerns about the growing interconnectedness of the cryptocurrency market with the financial sector and larger economy. “The strong growth of Bitcoin and other highly volatile crypto-assets presents risks, not only to investors but potentially jeopardising financial stability,” it stated, highlighting the potential dangers posed by these assets as their influence expands.

Additionally, the report noted a troubling trend: non-financial firms amassing Bitcoin, which results in exposure to significant price fluctuations. This acquisition trend, bolstered by companies like Strategy (previously MicroStrategy), which began its Bitcoin investment journey back in August 2020, illustrates a broader corporate enthusiasm. Companies such as Metaplanet and GameStop have since jumped on the Bitcoin bandwagon, following in similar footsteps.

The report didn’t stop there. It also warned about stablecoins, particularly those pegged to the dollar, expressing concern that these could pose systemic risks. The Bank suggested an increased reliance on US government bonds to support these tokens might expose the financial system to vulnerabilities. If either the stable operations of these coins or the underlying bonds face disruptions, the impact could ripple across the global financial landscape.

Interestingly, the timing of this report coincides with comments made by Giancarlo Giorgetti, Italy’s economy and finance minister. He cautioned against underestimating the influence of US dollar stablecoins, hinting that US policy around them might be more hazardous than former President Trump’s tariffs, a statement that certainly raises eyebrows.

In his speech, Giorgetti underscored the need for strengthening the euro’s standing globally. He posited that the advent of the Digital Euro could help decrease reliance on foreign digital offerings, indicating a strategic move to elevate Europe’s position in the digital currency space.