Financial Regulators Must Embrace a Multidisciplinary Approach to New Technology, Says Expert
By Claudia Biancotti, July 8, 2025
As technological innovations continue reshaping the financial landscape, regulatory authorities face unprecedented challenges. Claudia Biancotti, Director at the Bank of Italy and research advisor to the Head of Information Technology, argues that maintaining financial stability and protecting society requires regulators to adopt a multidisciplinary perspective—integrating technical, economic, legal, and sociocultural expertise.
The Intersection of Finance and Technology: A Historical Continuum
Finance has always been intertwined with technological progress. From banks’ early use of the telegraph in the 19th century to the creation of SWIFT in the 1970s—a global messaging network facilitating international payments—and the advent of ATMs and smartphone banking apps, innovations have continuously transformed how consumers access and manage money.
Today, this transformation accelerates. Blockchains, digital ledgers offering secure decentralized record-keeping, were initially designed for financial applications. Social media platforms increasingly influence retail investing behavior, while artificial intelligence (AI) underpins market trends and decision-making algorithms. These emerging technologies bring both promise and peril.
Case Study 1: The Bybit Hack – The Growing Sophistication of Crypto Threats
On February 21, 2025, Bybit, a prominent cryptocurrency exchange, suffered a massive cyberattack resulting in the theft of approximately $1.46 billion in tokens. This breach, attributed to the Lazarus Group—a North Korean state-sponsored hacking organization—stands as the largest heist in cryptocurrency history.
Unlike acts of sabotage or political maneuvering, Lazarus typically targets financial gain, motivated by North Korea’s ongoing economic hardships and funding needs for its nuclear program. The group has previously infiltrated banking systems, famously stealing $101 million from Bangladesh’s central bank and exploiting compromised SWIFT credentials.
Cryptocurrency platforms present lucrative, softer targets due to comparatively lax cybersecurity regulations relative to traditional financial institutions. Experts note that technical safeguards—such as mandating multi-device verification for outgoing transactions—could have prevented or lessened the Bybit breach but are too costly and currently unregulated in many jurisdictions.
Moreover, the inherent anonymity and decentralized structure of cryptocurrencies make them attractive for money laundering. Within a day of the hack, roughly 25% of the stolen tokens were obscured through complex networks of transactions designed to conceal their origin. Though the U.S. and EU have implemented measures to counteract crypto-related laundering, enforcement gaps remain globally.
Notably, Bybit demonstrated resilience by managing to meet withdrawal demands post-incident, potentially utilizing internal funds and industry loans. However, the lack of mandated transparency means the exchange’s medium-term sustainability is uncertain.
This event underscores an accelerating trend: the increasing integration of crypto with traditional finance. Crypto firms are now publicly traded, stablecoin issuers hold reserves in government bonds and bank deposits, and blockchains may soon underpin mainstream payment systems. According to Klaas Knot, Chair of the Financial Stability Board, crypto assets, although under 1% of global financial assets, have surpassed the scale of the U.S. subprime mortgage market before the 2007 financial crisis, risking systemic consequences if under-regulated.
Case Study 2: The GameStop Rally – Social Media’s Influence on Financial Markets
January 28, 2021 marked a landmark episode in stock market history when shares of GameStop, a traditional video game retailer, soared spectacularly to $483 per share, a meteoric rise driven largely by retail investors coordinating through social media channels.
The U.S. Securities and Exchange Commission (SEC) attributed the price surge to bullish sentiment fueled by online communities and social media platforms, where investors rallied as underdogs against hedge funds betting against the stock. This phenomenon birthed the concept of “meme stocks,” markets driven as much by internet trends as by fundamentals.
Several factors aided this episode: rapid social media communication, widespread use of gamified trading apps, and a growing sentiment of “financial nihilism” among younger investors who feel traditional paths to wealth-building—like education and steady employment—are no longer viable.
Events like the 2023 Silicon Valley Bank crisis, which unfolded swiftly in digital spaces, and continuing popularity of meme coins in 2025 highlight the persistent and growing impact of online dynamics on financial behavior.
While increased information accessibility via the internet could theoretically improve market efficiency, this depends crucially on accuracy. Financial influencers or “finfluencers” sometimes promote dubious or fraudulent schemes aimed at maximizing their own popularity and profits rather than disseminating objective advice. As legal scholar Sue Guan points out, such content can distort asset prices, undermining corporate governance, capital formation, litigation, and overall market confidence.
Even more concerning is the potential for malicious entities—including state-sponsored actors—to exploit social media platforms to disrupt market fairness or stability beyond mere financial gains. Although no direct evidence links these actors to the GameStop event, prior influence operations on social media suggest it is only a matter of time before such tactics emerge more prominently in finance.
The Need for a Multidisciplinary Regulatory Framework
These case studies spotlight the complex, intertwined challenges posed by the digital economy. Financial regulators can no longer rely solely on traditional economic and legal tools. They must expand their expertise to include fields such as information technology, cybersecurity, behavioral science, and cultural analysis.
By understanding the technical intricacies of blockchain protocols, the sociological aspects of online communities, and the geopolitical context of cyber threats, regulators will be better equipped to identify and mitigate risks while fostering innovation responsibly.
Such a multidisciplinary approach will help ensure that regulatory frameworks keep pace with rapidly evolving technologies, ultimately protecting consumers, preserving market integrity, and sustaining financial stability in a digital age.
Claudia Biancotti is a Director at the Bank of Italy focusing on cryptoassets, AI safety, and cybersecurity, with prior experience in economic research and international finance forums.