I think u/alkibiades415 is probably right that this isn't genuine. I'm a historian of Roman magic and religion, so this is close to my area of expertise. A big red flag for me is the fact that the text isn't in the CIL (it would show up in this database if it was: http://db.edcs.eu/epigr/epi_ergebnis.php) - the authoritative collection of Latin inscriptions - which suggests that epigraphers think it's questionable too. To be honest the two things don't match. The inscription is quite like the obscene graffiti from Pompeii where men and women talk about their sexual conquests, but a phallic image like this would normally be used for supernatural protection, perhaps in the home.

From the phallic side there are also elements of the image that make me wary. The 'hand from the cloud' motif is, as far as I know, a Christian symbol representing the hand of god, so what it would be doing holding the reins of a phallic creature I don't know. The creature itself is close enough to genuine examples I suppose, but I'm not sure I've ever seen one being held by reins. If anything they're usually being ridden rather than restrained like this.

The inscription is not exactly clear to me. Something like: "he/she/it fucks by riding with quivering and a little prancing." futuit from futuere, the standard word for "fuck" in Latin. The BM has equitan do but it is clearly one word, equitandō, the ablative gerund of equitāre "to ride a horse" (or here, any other mountable thing). tremulīs is an ablative plural adjective, here used substantively I suppose. I'm not sure. A deambulātiō is a promenade, a little walk. What exactly it means is not clear to me.

We have no idea where or when it came from, because this Mr. Witt acquired it (in the 19th century) from an illicit trader. IF it is even real, and not a forgery, we will never know for sure where it came from, and we can only date it by comparison with other similar objects with some sort of provenance. This is why, in the modern world, the sale of illicit antiquities is illegal in the West. When you take an object out of its archaeological context, you strip it of much of its most useful scholarly information.

There is nothing unusual or unique about this phallus image. In fact, if you go to the "Secret Cabinet" in the Naples Museum, you can see many such things. Example. The phallus was a symbol of fertility in the ancient world, and also apotropaic, meaning it was put up to ward off undesirable spirits. There were dicks ALL OVER ancient cities, drawn and inscribed on every surface imaginable. Quick search.

Museums have tended to hide these away because in the post-Roman period, the Western (read: Judeo-Christian) World got very prudish, and sex became taboo and shameful. It's a topic for an entire book rather than an AH thread. Many ancient artefacts wound up in the hands of the Church, especially in the Renaissance, especially in Italia. Sensibilities change over time, especially over 2000 years, and such things become problematic to display in high-society 19th century London.