Italy’s central bank has issued a stark warning as the crypto market rallies sharply, sounding the alarm over potential global financial instability. The surge, largely attributed to renewed political support from U.S. President Donald Trump following his return to office, has revived bullish sentiment across digital assets.
Trump’s Return Sparks Crypto Rally
According to a recent report, Bitcoin led a market-wide surge after Trump re-entered the political stage with a pro-crypto agenda. His comeback helped propel the total crypto market capitalization to $2.75 trillion by March, with Bitcoin accounting for over 60% of that value.
Contributing to the momentum is Trump Media & Technology Group’s announcement of a utility token and digital wallet to expand its Truth+ streaming service. This move has further reinforced perceptions of a crypto-friendly administration.
Stablecoin Risks Could Trigger Market Shock
Italy’s central bank is particularly concerned about the growing dominance of dollar-backed stablecoins such as USDT (Tether) and USDC (Circle). These tokens are pegged to U.S. Treasuries, and officials warn that mass redemptions could destabilize global bond markets.
“If large-scale withdrawals occur, it could trigger a shock across both U.S. and international financial systems,” the bank cautioned.
EU Regulators Worry About Euro’s Future
Despite the EU implementing its MiCA Regulation (Markets in Crypto-Assets Regulation), Italian authorities fear it may not be sufficient to counter the rapid spread of crypto assets, especially stablecoins tied to the U.S. dollar. ECB President Christine Lagarde has echoed concerns that the euro’s influence could weaken if stablecoin adoption continues at its current pace.
Italy is calling for deeper global cooperation to prevent systemic risks as crypto usage expands beyond tightly regulated sectors.
U.S. Oversight Also Under Scrutiny
In the United States, regulatory concerns are also mounting. President Trump has reportedly appointed pro-crypto officials to key regulatory positions and disbanded a Justice Department unit that previously focused on investigating crypto-related fraud.
Adding to the controversy, Trump’s sons are supporting a new stablecoin, coinciding with the advancement of the GENIUS Act, a legislative proposal that critics argue could loosen crypto oversight and weaken investor protections.
Because the recent crypto surge, driven by speculation and weak oversight, could cause financial instability.
Because they’re tied to U.S. Treasuries, and a mass sell-off could disrupt global financial stability.
