Bank of Italy Governor Fabio Panetta has outlined new guidelines focusing on bank-issued electronic money tokens (EMTs) under the European Union’s crypto asset rules, aiming to stabilize the payment system.

The Bank of Italy is preparing to introduce guidance for financial institutions to clarify the European Union’s regulations regarding crypto assets. This move aims to safeguard the stability of the payment system.

Speaking at the Italian Banking Association, Fabio Panetta mentioned that the E.U.’s Market in Crypto Asset Regulation (MiCAR), which recognizes electronic money tokens (EMTs) and asset-reference tokens (ARTs) as means of payment, might conflict with Italy’s law.

According to MiCAR, issuers of ARTs and EMTs must hold the “relevant authorization” to operate in the E.U. The requirements are set out in the Markets in Crypto-assets Regulation (MiCAR) and are complemented by technical standards and guidelines developed by the European Banking Authority. However, Panetta indicated that Italy is likely to permit only EMTs, without approving ARTs.

“Our assessment is that the only instruments that can fully preserve public trust as means of payment are EMTs, which can be issued by banks or electronic money institutions.”

— Fabio Panetta

Italy’s selective adoption of MiCAR remains uncertain. The country is also reportedly considering stricter penalties for crypto-related offenses to combat market manipulation. Proposed legislation aims to impose fines ranging from €5,000 to €5 million ($5,400 to $5.4 million) for offenses like insider trading and unauthorized disclosure of inside information.

The decree assigns oversight of crypto activities to the Bank of Italy and market regulator Consob, empowering them to maintain financial stability and ensure market orderliness.

In early 2023, the Bank of Italy emphasized the need for a strong, risk-based regulatory framework for stablecoins, aiming to prevent a potential destabilizing “run” on these digital assets. The financial regulator highlighted the importance of regulatory attention, especially towards stablecoin issuers, due to their close ties with decentralized finance.

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