European Central Bank (ECB) policymaker and Bank of Italy Governor, Fabio Panetta, has raised concerns over the reputational risks banks face as they expand into crypto-asset services, cautioning that losses in digital assets could significantly damage public trust in the traditional banking system.
Banks Urged to Monitor Crypto Reputational Risks
Speaking at the presentation of the Bank of Italy’s annual report, Panetta called for enhanced oversight of how financial institutions engage with cryptocurrencies and related services. He warned that the interconnectedness between the crypto world and traditional finance is growing, raising the risk of confusion among customers and potential threats to the stability and credibility of the banking sector.
“Crypto-asset holders might not fully understand their nature and conflate them with traditional banking products,” Panetta noted. “This could have negative repercussions for confidence in the credit system should losses occur.”
Traditional Banks Moving into Digital Assets
Panetta’s remarks come as major European banks take significant steps into the cryptocurrency space:
Intesa Sanpaolo’s Bitcoin Experiment
- Italy’s largest bank, Intesa Sanpaolo, purchased €1 million in Bitcoin in January 2025.
- CEO Carlo Messina described the move as a “test.”
- The bank established a proprietary digital asset trading desk in 2023 and has since handled spot crypto trades.
Santander Exploring Crypto Services
- Spanish banking giant Santander is reportedly in the early stages of offering crypto access to retail customers via its digital bank.
- Plans also include the development of a stablecoin, according to a Bloomberg report.
Panetta’s Call for Prudence and Regulation
Panetta stressed that as traditional financial institutions enter crypto markets, regulatory bodies must ensure adequate consumer protection and transparent communication. Misunderstandings about the nature and risk of crypto assets could lead to widespread financial missteps, especially if users believe these assets are covered by traditional banking guarantees.
“We must prevent a scenario where a crypto-induced crisis undermines the broader financial system,” he warned.
Crypto Integration Raises Broader Systemic Concerns
The ECB has repeatedly voiced skepticism over the risks posed by unregulated digital assets. Panetta’s latest warning reinforces the need for a comprehensive regulatory framework as banking and crypto worlds continue to converge.
As European banks like Intesa Sanpaolo and Santander deepen their involvement in crypto-assets, regulators such as Fabio Panetta are sounding the alarm. Without strong oversight and public awareness, the blending of traditional banking with volatile digital assets could have serious reputational and systemic consequences.
