30th April 2025 > > ETFs, Tariff Wars, & Bank of Italy.

tl;dr

Spot ETF inflows are very positive. The possible impending (or not) resolution of Trump’s Tariff Wars may be positive (or not). The Bank of Italy is just wrong.

Market Snap

Market Wrap

The spot BTC ETF inflows for Monday was revised from a negative $380mm to a positive $591mm which is quite a change. The last eight ETF trading days have all been inflows totalling just shy of $4bn. That’s not too shabby.

Curious Cryptos’ Commentary – Trump’s Tariff Wars

Secretary of Commerce, Howard Lutnick, has trailed the first of presumably many trade deals with an unspecified country. When the details are made public, if the trade deal removes the Trump Tariffs and lowers non-tariff barriers to trade (both big ifs I grant you), then consensus economic opinion is that everyone will be better off.

Once a few of these new deals are announced, we will know whether global trade is going to be freer or will be more restricted than before. I am sure almost everyone has already prejudged that question. For me, I will wait until we see the hard facts.

Curious Cryptos’ Commentary – Bank of Italy

The Bank of Italy has released its annual “Financial Stability Report”:

https://www.bancaditalia.it/pubblicazioni/rapporto-stabilita/2025-1/en_FSR_1_2025.pdf?language_id=1

Though cryptos are not the focus of this report (unsurprisingly Trump’s Tariff Wars take the top spot), the report does dedicate a special “box” to the topic of cryptos. Like all central banks, the Bank of Italy can spot a mortal threat to its self-perceived pre-eminence a mile away. Cryptos fit that definition in spades.

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The intro to the report’s special box is probably a fair comment:

“If these instruments (cryptos) were to become more closely entwined with the traditional financial system, there could be greater vulnerabilities for markets and intermediaries.”

Except of course the “If” should say “When”.

The comment could also be applied to any product, financial or otherwise, that one could conceivably think of. So, yes, it probably is fair, but also entirely redundant, and not at all useful in understanding any potential opportunities or problems posed by cryptos. But it does set the scene for understanding the true motivation of the bureaucrats writing the report.

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An early complaint is that “Furthermore, a significant portion of Bitcoin is held by companies operating exclusively in the digital asset sector (e.g. trading platforms).”

This is patently a good thing – centralised crypto currency exchanges should hold 100% of their liabilities to their customers in a 1:1 relationship of each crypto. If exchanges were not holding “a significant portion of Bitcoin” that really would be cause for concern. I am not sure if the authors are being deliberately dumb on this point.

Rightly the report identifies that stablecoins should be over-collateralised with cash or cash-like instruments, though it overstates the risk to the short-term treasury market of these ongoing buyers. In the context of total US government debt of nearly $37 TRILLION, the combined market cap of USDT and USDC (by far and away the bulk of the stablecoin market) of $210bn, representing just 0.6% of US government total debt, doesn’t even touch the sides.

Finally, there is criticism of the EU’s global leadership in crypto regulation embodied by MiCA. The public spat between the EU Commission and the ECB/euro-area sovereign central banks (https://www.curiouscryptos.com/post/23rd-april-2025-the-eu-california) is not going away. It is going to be very enjoyable watching this fight play out in real time.

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The moral outrage that this report is trying to concoct about stablecoins is a blatant, and politically charged support of the central bank’s political master, Italy’s Minister of Economy and Finance, Giancarlo Giorgetti:

"The general focus these days is on the impact of trade tariffs. However, even more dangerous is the new U.S. policy on cryptocurrencies and in particular that on dollar-denominated stablecoins."

Please excuse my French, but what a knob, is the only reasonable response to such nonsense.

Unsurprisingly, the despot’s favoured tool of oppression raises its ugly head:

"The digital euro (CBDC) will be essential to minimise the need for European citizens to resort to foreign solutions to access such a basic service as payment."

Giorgetti commands no respect at CC Towers.