• The unregulated cryptocurrencies’ rise can become a problem for the market.
• Paolo Savona joins other institutional leaders to call for more regulations for digital assets.
The spread and rise of digital currencies without precise and clear regulation can cause concern. The head of the Italian regulator has also said that the whole affair could damage the way the market operates.
On Monday, these statements were made by Paolo Savona, who has also joined other institutional leaders who call for more strict regulations for cryptocurrencies.
Paolo Savona is Italy’s securities market regulator and agrees that digital currencies can facilitate illicit activities such as terrorism and money laundering. He warns that illegal activities could undermine the ability of central banks to carry out monetary and financial policy.
Regulate cryptocurrencies to avoid market problems
The Consob president affirms that if virtual currencies are not properly supervised, it could raise concerns in the financial market. He also commented that there might be worsening market transparency, rational choice for operations, and legality.
The United States and Europe regulate cryptocurrencies and their providers, as investors are always in search of ground rules.
Some countries like China, Russia, Britain, and the ever-evolving regulatory framework are considering launching their central bank cryptocurrencies.
Paolo Savona claims there are between 4,000 and 5,000 digital currencies in circulation with no real rule or regulation. In an interview, he commented that if you add to Consob’s recent experience of shutting down hundreds of websites in Italy used to collect illegal savings, the outlook that may emerge in the short term is worrying.
He warns that digital currencies can be a shield used for criminal activities such as money laundering, kidnapping, terrorist financing, and tax evasion. Savona has also commented that if it takes too long to regulate and find an efficient solution at the European level, Italy must take measures on digital assets.
US signals increased risk and oversight for virtual currencies
Like Europe, the United States also signals increased regulation and fiscal supervision for cryptocurrencies. Jerome Powell, the head of the US Federal Reserve, increased the pressure to regulate digital currencies. He claims they represent a concern and risk to financial stability.
The treasury department also commented that they are concerned about wealthier people using unregulated digital assets to evade taxes. He also indicated that he wants the authorities to inform all large transfers made via crypto assets.
These announcements came as Bitcoin tumbled and dropped as much as 30% last month after China announced new restrictions on the digital currency market. Volatility in the sector also represents a risk for investors, say the competent authorities.