Cryptocurrencies, in Italy +64% in a year: here are the rules, tips and risks

They are not currencies, like the euro, the US dollar or the Japanese yuan, because they are neither issued nor regulated by a recognised central authority: therefore, they are not legal tender. Nor are they a payment instrument because no one can be forced to accept them in commercial transactions. What, then, are cryptocurrencies, crypto-assets and crypto-assets? They are a particular form of investment: an alternative, however, which is not fully regulated and therefore subject to significant risks. The Autonomous Federation of Italian Banks (Fabi) has prepared a 'Guide to cryptocurrencies', produced as part of the Financial Education Month, in which the indications of the Bank of Italy and Consob have also been collected: as the supervisory authorities suggest, great care should be taken before choosing whether and how to invest in this sector.

There are risks of an operational nature, which strictly concern cyber protection and security: cryptocurrency issuers and companies have repeatedly been subject to cyber attacks: a real boom, that of cyber scams, which has led users, in some circumstances, to the total loss of their cryptocurrency wallets. The Bitcoin and other cryptocurrencies are born and traded only in digital form, so much so that they do not exist in paper form. And beware: in the event of fraud, bankruptcy or cessation of business on the part of the platforms that manage them, users cannot count on effective legal and contractual protection, so there is a risk of suffering considerable financial losses. If one decides to invest one's savings in this type of activity, one must first of all bear in mind the extreme volatility that characterises them. They have no connection to institutions and central governments: therefore, they can be created by anyone, at any time, anywhere in the world. Cryptocurrency transactions take place on a decentralised computer network.

The global cryptocurrency market is worth USD 3 trillion: the figure is updated in mid-November and is up by 79.2 per cent compared to January 2024, when the total 'turnover' of Bitcoin, Ethereum and other 'cryptos' stood at around USD 1,680 billion. In percentage terms, the largest cryptocurrency market is firmly in the United States, with 16.58% market share at the end of September 2024, followed by India, with 9.44%, and Brazil with 8.10%. Among the several thousand cryptocurrencies, that is, by far the largest market share belongs to Bitcoin, which has reached 60% over time, followed by Ethereum at around 13%. As far as the overall value is concerned, it is worth emphasising that, compared to the 'traditional' and regulated financial markets, these are marginal volumes: the overall capitalisation of securities listed on financial markets, globally, stood at $112 trillion in November.

In Italy, the market is worth EUR 2.22 billion and 1.35 million Italians have 'invested' in cryptocurrencies, with an average of EUR 1,600. The figure refers to last June and is up by 870 million (+64%), compared to 1.35 billion in June 2023. The trend over the 12 months, however, has seen strong rises and sharp declines in prices. In fact, the countervalue in euro of the total balance of virtual currencies went from 1.35 billion at the end of June 2023, to 917 million euro in September of the same year, to then rise again to almost 1.5 billion in December, to then skyrocket in the first quarter of 2024, touching 2.9 billion (+92% in just three months) and then fall back to 2.2 billion in June 2024, marking a contraction of 22.4% in just three months. As for the characteristics of the Italian cryptocurrency market, over 99% of holders are individuals. Among them, Millennials are the most numerous (37%), but hold amounts of around 39% of the total value, while holders between 40 and 60 years old, while representing 28% of the total, own 49% of the total 'invested'. In addition, in the first six months of 2024, conversion transactions from legal currencies (such as the euro) to virtual currencies were carried out for a countervalue of almost 2.8 billion, with an average of 9 transactions per customer and an average amount of just over EUR 260. Conversely, virtual currency to legal tender transactions recorded amounted to about 2.9 billion, about 10 per customer and an average countervalue of EUR 266. Millennials are also the most active in transfer transactions in and out of cryptocurrency service providers: about 74% of total transactions are attributable to them. These data, however, are not exhaustive of the crypto market in Italy: only a portion of cryptocurrency wallets and transactions take place through service providers duly registered in Italy: this means that a share of Italians' investments in bitcoin or other instruments is not included in official monitoring and statistics.

National supervisory authorities, such as the Bank of Italy and Consob (the National Commission for Companies and the Stock Exchange), as well as European supervisory authorities, have intervened several times to help better identify what risks lie behind a very complex and still little-known world. In addition to reiterating that they are only rarely suitable for use as reliable and effective payment instruments, the authorities also emphasise the specific risks that characterise them as investment instruments. If one decides to invest one's savings in this type of asset, one must first bear in mind the extreme volatility that characterises them. Whoever buys 100 euros in cryptocurrencies today must be aware that those 100 euros can vary, significantly, upwards, but also downwards, until they drop to zero altogether, even within the space of a single day. That of crypto-assets is, then, still a partially regulated field. It is difficult, after all, for the authorities to regulate a phenomenon of a global nature. Moreover, as already mentioned, cryptocurrencies are neither issued nor controlled directly by public institutions, but by private entities. This means that, in the event of fraud, bankruptcy or cessation of activity by the platforms that manage cryptocurrencies, users cannot count on effective legal and contractual protection, with the risk of suffering significant financial losses. Another aspect not to be underestimated is the excessive complexity, often accompanied by a lack of transparency, of some products and services linked to crypto-assets, which may hide internal mechanisms that accentuate possible value fluctuations and losses. Finally, there are risks of an operational nature, which strictly concern cyber protection and security: issuers and companies that manage crypto-assets have repeatedly been subject to cyber attacks that have led users, in some circumstances, to the definitive loss of their cryptocurrency wallets. The same can happen if private access keys are lost, without which one can no longer access one's crypto-asset wallet.