The Italian government is set to ramp up its surveillance of the cryptocurrency markets as part of its compliance with the European Union's Markets in Crypto-Assets (MiCA) regulatory framework. This move aims to curb and punish insider trading and market manipulation schemes within the digital asset sector.

The new regulations will impose fines ranging from 5,000 to 5 million euros, depending on the severity and scope of the regulatory violations. This crackdown is a response to the European Union's MiCA framework, which was first passed in 2022 and is forcing blockchain firms to make tough decisions, while decentralized finance (DeFi) protocols face the difficult choice of fully decentralizing their networks or submitting to the framework's Anti-Money Laundering and Know Your Customer regulations.

Fully decentralized networks are exempt from MiCA's reporting requirements, but due to the use of foundations and other intermediaries that help moderate decentralized communities, these protocols risk breaching MiCA's definition of a sufficiently decentralized network. This means these DeFi protocols must either fully decentralize or accept a situation where users must submit verification data, which may be a tough sell for many network participants.

Centralized exchanges, such as Binance, have also been affected by the MiCA framework. Binance has informed its European customers that it is moving to a model categorizing stablecoins as either authorized or unauthorized, in line with the MiCA framework, and slowly transitioning users to the new system over time. Similarly, Uphold has made changes to remain compliant with the EU's regulatory overhaul and has announced the delisting of six stablecoins, including Tether (USDT), Frax Protocol (FRAX), Pax Dollar (USDP), Dai (DAI), TrueUSD (TUSD), and Gemini Dollar (GUSD).

Despite the mounting regulatory pressure in Europe, many experts believe that stablecoins have a bright future and could potentially stave off debt crises spurred on by overprinted fiat currencies. Former United States House of Representatives Speaker Paul Ryan recently made the case that stablecoins could help to mitigate shortfalls in the U.S. economy caused by the debt-laden U.S. dollar. Additionally, Jeremy Allaire, CEO of the stablecoin issuer Circle, expressed optimism in the future of stablecoins, stating his belief that they will represent 10% of the money supply in the next decade.