Cryptocurrencies in the sights of Consob President Savona

On the occasion of the 50th anniversary of the birth of Consob – National Commission for Companies and the Stock Exchange – the Italian financial market supervisory authority, the President Paolo Savona he held a long speech at Palazzo Mezzanotte, the headquarters of the Italian stock exchange, in front of representatives of the institutions and the world of finance.

A significant part of his speech which touched on various topics, including that of savings and the creation of a new and single financial control authority for bank accounts, concerned the cryptocurrenciesand there has even been talk of tokenization.

There were even some colorful metaphors, such as the one he compared inflation to a Hydra with many heads, difficult to cut off because they grow back.

But also new definitions that concern artificial intelligenceredefined as Enhanced Human Intelligence. Savona hopes that in the future AI can also be used to prevent financial crises, thanks to its advanced algorithms capable of preventing them in the bud.

Cryptocurrencies: what does Savona’s speech say?

Unfortunately, to date, knowledge of the crypto world appears rather poor, especially among institutions and, when it is mentioned, the intention is often that people read written sentences with the sole attention of not making mistakes.

Some passages that connected the Bitcoin blockchain to the banks appeared incomprehensible, and Savona himself repeatedly gave the impression of reading a script written by others, rather than arguing with full knowledge of the facts.

However, the desire to talk about an emerging phenomenon remains, as does the desire to use tools such as blockchain and distributed public registers in the financial field.

As was easy to expect, interest is focused in particular on CBDCs which allow for greater control, while partially betraying the decentralization paradigm that inspired blockchains.

The complete speech of President Savona is available online on the Consob website, and is composed of 22 slides divided into two parts. In this article we will only analyze those that concerned cryptocurrencies. It starts on page 6.

The first section is a simple reminder of the regulation of cryptocurrencies, an emerging phenomenon that must be carefully investigated. There is also talk of Blockchain and DLT, or distributed electronic register.

The next slide instead focuses on CBDCs, i.e. stable coins issued by central banks. As happens in many other countries, Savona is in favor of their use, also because in his opinion they could somehow “cut out” other cryptocurrencies: “exclude the legal monetary use of cryptocurrencies.

From here on, the text becomes more cryptic than the cryptocurrencies themselves, and it is not clear what the connection is with the banks, which would redirect their operations towards savings management.

The next slide is a masterpiece of bureaucratic language, and frankly even in this case it is difficult to understand its meaning. The first part seems to be a reference to digitalization and the use of CBDCs which could promote greater balance. The second part instead talks about tokenizationa very popular topic in the cryptocurrency sector especially for its financial implications.

Let us remember that tokenization is the process of splitting any asset via the blockchain.

The slides then continue talking about inflation and other topics related to the world of savings and banks. The last noteworthy folder regarding crypto and blockchain is found at the end and more precisely on page 17.

Here President Savona returns to talk about a digitized legal currency with a decentralized register, the extension of the same technique, i.e. blockchain, to traditional financial instruments and the regulated use of artificial intelligence.

Conclusions

While on the one hand it was a celebratory speech, it is interesting to note how new technologies, blockchain and artificial intelligence, played an important role and were mentioned several times. There were no relevant insights or interesting regulatory ideas, this was not the right place, after all, but the desire to use new technologies in the face of more stringent regulatory controls emerged.

A position that Consob shares with the SEC, given that they carry out the same control task even if in two different states. The use of the term tokenization is also significant, demonstrating the desire to use new technologies also in traditional markets.