Bank of Italy studied the impact of Crypto assets on the balance of payment

Recent years have shown a significant acceleration in the adoption and development of Digital assets particularly in the financial sector. Alongside the well-known and widely used Bitcoin, other cryptocurrencies have been developed. Meanwhile, different instruments are being developed rapidly, such as stablecoins, Central Bank Digital Currencies (CBDCs) and Non-Fungible Tokens (NFTs).

Recently, a paper was published by the Bank of Italy to evaluate and highlight the impacts of such instruments on the compilation of external statistics. It aimed to access the potential effects on some balance of payments items, both in the current and in the financial account. The major objectives were providing a general overview of such instruments in the context of external statistics and highlighting the expected effects that their adoption and use may have on BoP compilation.

The paper provided a general definition and further classified crypto assets. These were classified and bifurcated into three types that are designed to act as a general medium of exchange, designed to act as a medium of exchange within a platform and security crypto assets. It also provided the external statistics compilation.

Research further mentioned the recording of crypto assets in the current, capital and finance account. The paper further added monitoring phenomena potentially affected by crypto-assets. The paper underlined that Digital assets transactions and positions are not comprehensively captured within the current BoP framework.

But, Regardless of practical difficulties in their classification, crypto-assets representing a claim on
the issuer are largely considered financial assets, to be included in the financial account of the BoP
and the IIP. On the other side, crypto assets with corresponding liabilities (CAWL) may be treated as financial or non-financial assets, depending on the subjective perception of different compilers, since their classification is still unsolved.

It is mentioned that while recording CAWL in the current account poses several issues, the identification of BoP relevant transactions, the evaluation of transactions, the unclear role of the exchange platform managers, the possible overestimation of the volumes exchanged, the measurement of the intermediation services connected with trading activity within a platform and most of all, the possible lack of information.

Further, it underlines that when it comes to CAWL, effects on the financial account are twofold, relating both to the assets used as reserves and to the coins
held by users. The first can be estimated as long as these are kept by custodians providing data to the
relevant National Competent Authorities (NCAs). CAWL holdings, instead, are more difficult
to ascertain without the involvement of service providers with ad-hoc reports.

Thus, the research proposed that the widespread use of digital assets can have relevant impacts on remittances and, in theory, on any kind of cross-border transactions, which may benefit from faster and cheaper conditions.

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