Savona, Consob: “Only cryptocurency regulation will avoid the financial far west”

According to the president, it is necessary to overcome the global approach to the market: "We need a new economic theory on decentralized blockchain, which, however, cannot be technologically neutral"

12 Nov 2021

Veronica Balocco

Cryptocurrencies, integrated into all kinds of financial contracts, “are like the phoenix: they exist, but we don't know what they look like. Building an economy with cryptocurrencies requires a better understanding of this complex financial world, which is still evolving. I think it is first of all necessary to accept that we need a new economic theory integrated with cryptocurrencies ".

These are the words spoken by the president of Consob, Paolo Savona, during a webinar organized by Consob with the University of La Sapienza. According to Savona, "it is not the virtual products that must be regulated first, but rather their decentralized blockchain localization, which is not impenetrable for all cryptocurrencies" and consequently "there cannot be any regulation that is technologically neutral".

One of the problems is the identification of the "agents" that will have to be regulated, given that some platforms claim that they are not real intermediaries but rather facilitators of transactions through new technologies: "Current legislation, especially in Italy, leaves room for to these different interpretations, and it would be better to discipline these distinctions "to put an end to a" Far West of finance and prevent it from spreading to Europe ".

Finally, the creation of a central bank digital currency, which aims to stabilize the system and would offer the community the technological innovation available to crypto assets: on the merits Savona suggests that "if central banks decide to launch their own cryptocurrency", this initiative “It should be tackled in conjunction with a re-regulation of banking once it leaves the money creation circuit”.

New rules based on experience and mistakes

Savona then recalled his proposal to "abandon a global approach to cryptocurrency markets and explicitly consider the different components and interpretations of the reality to be faced" through "experimental regulation" to obtain "a more valid regulation, learning from experience and errors ".

“Regulation is an ongoing process - he concluded - as economic and legal experts know very well that markets find ways to circumvent the rules once they are established. Furthermore, we cannot forget that the rules cannot be perfectly inserted in the framework of a civil code (as in Italy), leading to a management of cryptocurrencies similar to the Achilles and the turtle paradox ".

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