The European Union and the Bank of Italy have assembled a supervisory domain in a bid to merge distributed ledger technology (DLT) into the mainstream economy, said Ignazio Visco, the Italian central bank governor. Visco said this at the 29th Assiom Forex Congress, emphasizing the benefits offered by DLT, such an efficient financial system and crossborder transactions that are cheaper.
“Bank of Italy has to identify areas that new distributed ledger technologies can be issued to increase the overall financial system stability as well as client protection,” said Visco. He noted that in November, the Central Bank called for proposals on DLT application to banking, insurance and other financial payment services for the Milano hub. Visco further reiterated that the project’s purpose is disburse the best practices in the market in a bid to increase DLT reliance, management of internal risks and operational security among other aspects.
This call of action received more than 50 proposals from more than 80 participants, including those from Europe and southeast Asia. Evaluation of the submitted proposals is underway as the Bank of Italy works on tech solutions for a standardized comprehensive framework at the global level, enabling safe usage of DLT applications.
A catalyst solution has been devised to allow the use of Central Bank cash to settle securities trades on DLT platforms. The Central Bank is currently working with the Italian securities market and the Ministry of Economy & Finance to introduce MiCA’s authorization and supervision activities. The bank will also participate in developing global standards in conjunction with the Basel Committee to develop rules for the treatment of crypto assets and manage bank exposures. It will also work with the Financial Stability Board on developing recommendations for the markets and creating recommendations for the global cryptos stablecoins.
Visco has called for the initiation of rules to differentiate between high-risk instruments that divert resources from productive activities and those that bring on feasible benefits, thus making the financial system effective and efficient. Italy released its 2023 budget plan in which 26% capital gain tax from the sale of digital assets was featured on profits from the digital assets, which exceeded 2,000 euros ($2,145), as well as allowing tax payers to disclose their digital assets and paying 14% tax from Jan. 1, 2023. Italy’s economy is untouched by the ravages of the crypto market experienced in 2022 since the sector is unattached to the traditional financial mediators. Visco estimated that 2% of Italian households own moderate amounts of crypto assets.
As more central banks seek for ways to incorporate blockchain technologies into national economies, the public confidence triggered by this institutional interest could give industry actors such as Riot Blockchain Inc. (NASDAQ: RIOT) a leg up in their bids to expand their footprints into different markets.
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