Bank of Italy Governor Fabio Panetta recently shared that Italy’s central bank and its securities regulator are currently in talks with crypto service providers. The aim? To make sure there are strong protections in place against financial and cybersecurity dangers.

He brought up these important topics – crypto assets, digital finance, and cybersecurity risks within the context of global and European rules – during his speech at the 31st Assiom Forex Congress on February 15th.

Panetta pointed out that the crypto world is getting a lot of attention from regulators worldwide. This is because of concerns about things like money laundering and keeping the financial system stable.

He highlighted a key difference in approach: Europe has moved forward with MiCA (Markets in Crypto-Assets Regulation) to safeguard investors across the board. Meanwhile, the United States is taking a more individualized route, regulating crypto depending on whether each asset is considered a security.

US vs. EU regulatory divergence on crypto

Zooming in on the differing strategies between Europe and the US, Panetta mentioned the Trump administration’s executive order on digital finance tech back on January 23rd. He suggested this order indicates the US might be leaning towards actually integrating crypto assets more deeply into the traditional financial system.

Panetta warned that these regulatory differences could be a problem. He explained that crypto companies might try to take advantage of these gaps, potentially undermining the stability of the financial system. He went on to say:

“These regulatory divergences between the United States and Europe will need to be carefully assessed, once the US authorities’ position becomes clearer, in order to understand their international implications.”

During his talk, Panetta also let it be known that the Bank of Italy is working closely with the Commissione Nazionale per le Societa e la Borsa (Consob). Consob, for those unfamiliar, is the agency in charge of overseeing the Italian securities market.

Related: Italy’s largest bank enters crypto market with $1M Bitcoin investment

Threat from Big Tech’s potential crypto expansion

Both the Bank of Italy and Consob are paying close attention to the risks banks face regarding liquidity. This is particularly relevant as more and more people use online apps for banking tasks like depositing and withdrawing funds. The two agencies are currently in discussions with crypto service providers who are planning to set up shop in Italy:

“Banca d’Italia’s task is to ensure that these entities have adequate safeguards in place to manage strategic, operational and financial risks, as well as risks linked to money laundering and the circumvention of international sanctions.”

Panetta stressed the need for international rules to stop major tech companies from issuing their own digital tokens through everyday online payment systems.

He cautioned that if privately-issued digital currencies were to become widely used, traditional banks “would risk losing an important part of their operations.” He emphasized the potential knock-on effects this could have for the existing fiat financial system.