Italy’s Central Bank Warns Trump-Driven Crypto Surge Could Harm Investors and Financial Stability

Highlights:

• Bank of Italy warns rising crypto market poses global financial instability risks.
• Bitcoin drives market rally, boosted by renewed political backing from Donald Trump. 
• Italy is concerned that dollar-backed stablecoins could hurt financial stability and U.S. Treasuries.

Italy’s central bank, or Banca d’Italia, has warned about potential global financial instability as the crypto market rises sharply. The surge is driven by renewed political support from the United States. President Donald Trump after his return to office has boosted optimism in digital assets.

#Esceoggi #29aprile il 1° Rapporto sulla #StabiliitàFinanziaria del 2025, pubblicazione semestrale con le informazioni sulle condizioni del sistema finanziario italiano
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— Banca d'Italia (@bancaditalia) April 29, 2025

In its April 2025 Financial Stability Report released on Monday, the Bank of Italy stated that Bitcoin led a market-wide rally following Trump’s return to the political spotlight with a strong pro-crypto agenda. By the close of March, the global crypto market had a valuation of $2.75 trillion. Bitcoin accounted for more than 60% of this total value.

An additional 30% came from other unbacked crypto. Stablecoins, digital assets linked to regular currencies, made up only 9% of the total market. The U.S. dollar backs most of these stablecoins.

The report reads:

“The strong growth of Bitcoin and of other crypto-assets with high price volatility means risks not only for investors but also potentially for financial stability, given the growing interconnections between the digital asset ecosystem, the traditional financial sector and the real economy.”

Bank of Italy Warns of Stablecoin and BTC Risks

Banca d’Italia’s report also mentioned that more firms are accumulating BTC. This exposes them to big price changes, as they believe Bitcoin can help increase their share prices. Italy’s central bank is particularly concerned about the growing impact of dollar-backed stablecoins such as USDC (Circle) and USDT (Tether). These stablecoins hold U.S. Treasuries, which investors view as stable assets.

If many people or institutions suddenly redeem their stablecoins for cash, the demand for U.S. Treasuries could drop sharply. This could lead to falling bond prices, rising interest rates, and a disruption in financial markets.

The report comes shortly after a warning issued by Italy’s Economy and Finance Minister, Giancarlo Giorgetti. He emphasized that the growing popularity of U.S. dollar-backed stablecoins should not be overlooked. Giorgetti further stated that the impact of U.S. stablecoin policies could pose a greater risk than the tariffs imposed by Donald Trump.

Italy warns U.S. stablecoins threaten euro’s financial sovereignty

Italy’s economy minister Giancarlo Giorgetti warned that U.S. stablecoin policies pose a greater threat to Europe than trade tariffs, arguing they could weaken the euro’s role in global payments, according to…

— CoinNess Global (@CoinnessGL) April 16, 2025

In his speech, Giorgetti emphasized the importance of strengthening the euro’s global influence. He pointed out that the development of the Digital Euro is key to decreasing dependence on foreign digital alternatives.

In the United States, regulatory concerns are also growing. President Trump has reportedly appointed officials who support crypto to important positions and shut down a Justice Department unit that investigated crypto fraud. To make matters more controversial, Trump’s sons are backing a new stablecoin. This is happening alongside the GENIUS Act, a proposed law that critics say could reduce crypto regulation and weaken protections for investors.

Eric Trump: Banks Must Embrace Crypto or Disappear in 10 Years

For several years, central banks around the world have voiced concerns about crypto’s deeper links to traditional finance. They have repeatedly warned about the dangers this trend could pose to the broader financial system. Their concerns include high volatility, unclear regulations, and the possibility of widespread disruption across global markets.

Eric Trump, son of President Donald Trump and vice president of the Trump Organization, warned banks about the rise of crypto. In an April 30 interview with CNBC, he called the current financial system slow and unfair, saying it mainly helps the rich. He said the system pushed him into crypto and warned that if banks don’t change, they could disappear in 10 years.

JUST IN: 🇺🇸 Eric Trump warns banks must embrace cryptocurrency or face extinction in 10 years. pic.twitter.com/bFOsfFuAXK

— Whale Insider (@WhaleInsider) April 30, 2025