Italy's central bank warns that the crypto market surge, fueled by Trump's support, poses a global financial instability risk.

Italy's central bank has issued a stark warning that the renewed surge in the crypto market, fueled by Donald Trump’s return to the White House and his administration’s pro-crypto moves, could pose serious risks to global financial stability.

As the value of digital assets has soared to new highs and political support for crypto continues to grow, Italy’s concerns highlight deeper tensions and anxieties that are simmering beneath the surface of the crypto bull market.

Trump’s return to the political stage has seen him bring a pro-crypto agenda, which has seen the market surge. Bitcoin price hit new highs in March, helping to propel the total crypto market capitalization to $2.75 trillion, with Bitcoin making up over 60% of that value.

This momentum has been further supported by Trump Media & Technology Group’s announcement of a utility token and digital wallet to expand its Truth+ streaming service. The move has served to amplify perceptions of a crypto-friendly administration.

However, in a note, Italy’s central bank expressed worries over the growing dominance of dollar-backed stablecoins, such as USDT (Tether) and USDC (Circle). It explained that these tokens are fundamentally pegged to U.S. Treasury bonds.

“Should widespread redemptions arise, they could exert destabilizing pressure on global bond markets. If, on a large scale, they were to occur in an environment of weak global cooperation, it could trigger a shock across both U.S. and international financial systems,” the bank stated.

The note comes amid a broad rollout of the EU’s MiCA Regulation (Markets in Crypto-Assets Regulation), which aims to better regulate the crypto sector.

Yet, despite these efforts, Italian authorities fear that it may not be enough to counter the rapid spread of crypto assets, especially stablecoins tied to the U.S. dollar.

Earlier this year, ECB President Christine Lagarde also voiced concerns that the euro’s influence could dwindle if stablecoin adoption continues at its current pace.

As crypto usage expands beyond tightly regulated sectors like banking and insurance, Italy is calling for deeper global cooperation to prevent these emerging systemic risks.

In the U.S., regulatory worries are also brewing as President Trump reportedly appointed pro-crypto officials to key regulatory positions and disbanded a Justice Department unit that previously focused on investigating crypto-related fraud.

Furthermore, Trump’s sons are lending support to a new stablecoin initiative, rolling out a tokenized payments network. This move coincides with the pending legislation, GENIUS Act, which aims to overhaul the U.S. financial regulatory framework.

While proponents view the bill as modernizing American finance, critics argue that it could serve to lessen crypto oversight and diminish investor protections.

This influx of pro-crypto measures and personnel into the Trump administration could have far-reaching consequences for the global financial landscape.