Bank of Italy (or Banca d’Italia) has been expressing a considerably skeptical view about crypto assets in recent years. Even then, the bank has been taking an interest in the technology underlying cryptocurrency. Hence, the country’s central bank is now moving toward supporting a DeFi-based organizational pilot project based on the platform of Polygon.
Bank of Italy Intends to Start a Pilot Project for Crypto
Even though the bank has been always showing interest in blockchain technology, the latest initiative appears like a revolution in the agency’s often complex relationship with crypto assets. For example, Fabio Panetta, the latest governor of the Bank of Italy, has been keeping a hostile approach toward crypto.
In this hostility, he even stated two years back that there is no reason for the existence of crypto assets. Nonetheless, he will not assume the post of governor until this year’s November. Ignazio Visco, the present governor, appears slightly more supportive. In addition to this, the pilot project exclusively deals with finance. Moreover, it will be developed on a Polygon-like classic blockchain platform.
Thus, the turning point is much clear, even though there are still chances for the bank to theoretically pull back under the control of Panetta. The pilot project backed by the Bank of Italy takes into account the collaboration between Polygon Labs, Milano Hub (an innovation center), as well as Fireblocks (a well-known entity offering infrastructure related to crypto).
The objective is to develop an ecosystem dealing with security tokens to facilitate institutional decentralized finance (DeFi). Therefore, it is a project primarily focused on banks, financial organizations, and asset-managing companies among which notable is the Sanpaolo banking network. The experimentation will exclusively focus on security tokens as well as their communication with a DeFi atmosphere.
This is to guide organizational players to run in decentralized financial settings in complete compliance with requirements and guidelines concerning regulations. Milano Hub is the fintech platform that operates under the Bank of Italy. It is a tech center to support the digital transformation and innovation of the financial system of the country.
It is a virtual and physical space where private and public platforms can collaborate to develop initiatives targeting to promote digitization within the financial system of the country. It plays the role of an innovative instrument to ignite the implementation and experimentation of cutting-edge initiatives within the fintech sectors.
Apart from that, it also guarantees the accomplishment of the institutional objectives set by the Bank of Italy. They include the system’s competitiveness and stability, the dependability of the payment mechanisms, and the protection of clients. The proposal of the initiative was announced back in the year 2020 by the present governor with a determination to back the advancement of a secure broad-level digital economy.
As per Alessandra Perrazzelli (the then Bank of Italy’s Deputy Director General), the respective project deals with innovation in institutional finance. The official added that the project will revolutionize the financial and banking system with the adoption of digitization.
Latest Regulatory Agenda of Italy and European MiCA Let Crypto Firms Operate Securely
Nonetheless, until the 1st of January this year, the entities having such caliber remained incapable of taking the risk of running in a deregulated space. This was the date when the exclusive Italian regulation regarding crypto was finally implemented. Moreover, the latest regulations as well as the unique European MiCA have provided convenience for the crypto platforms to operate securely.