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Italy: Recent Developments on Bitcoin

(June 12, 2014) On May 2, 2014, the Central Bank of Italy released its Biannual Report, which included a statement advising Italians against buying, investing in, or using Bitcoin as a currency. (Eric Calouro, Italian Central Bank Sounds Warning on Bitcoin, BITCOIN NEWS SERVICE (May 2, 2014).) The main grounds for the Central Bank’s objections are Bitcoin’s lack of legal value, financial stability, and consumer and investor protection. (Id.) The Central Bank also mentioned Bitcoin’s potential use for criminal activities. (Id.)

The Central Bank also recognized the current efforts underway at the European level to establish a common framework to regulate virtual currencies. (Deepak Tiwari, Now Bank of Italy Issues Warning to Bitcoin Investors, FOREXMINUTE TRADE PLANS (May 4, 2014).) There are about 12.5 million Bitcoin units in circulation in Italy, for a total value of about €6 billion. (Bitcoin, l’allarme della Banca d’Italia “Rischi e nessuna tutela per chi li usa,” LA STAMPA (May 2, 2014).)

To bring attention to Bitcoin’s instability as a currency, the Bank mentioned that between December 2013 and March 2014, the value of Bitcoin in relation to the euro had decreased by half, and it recorded daily fluctuations in that period averaging approximately 4%, with peaks of more than 10%. (Id.) Finally, the Bank remarked that “currently, in the case of a loss of a unit of Bitcoin (for example, by theft by hackers), users are deprived of protection.” (Id.)