Promoting digital technologies, specifically crypto technologies, has been one of the Italian Government’s priorities in the past years. With the emergence of new crypto coins, including Zcash, the Government has established funding schemes to fast-track and promote such efforts. Such efforts are particularly targeting sectors that, conventionally, are considered the bedrock of the Italian business sector, including art, food, hospitality, and fashion.
Italy’s Government, through its Ministry of Economy and Finance (“MEF”), released a new decree (“Decree”) calling for the virtual asset or online currency service providers to expeditiously register in a soon-to-be instituted special unit of the register held by OrganismoAgenti e Mediatori (“OAM”). The new Decree monitors cryptocurrency exchange providers while executing the anti-money laundering regulations.
For an extended period now, both local and international governments have continued monitoring cryptocurrency markets closely, although with minimal intervention capabilities. On 28 April 2021, the Italian Securities and Exchange Commission (commonly referred to as Consob), alongside the Bank of Italy, released a joint statement asking the public and small investors to watch out for the risks encapsulated; in “crypto-transactions.” The Consob also released custom-designed sanctions when it discovered that certain services ranked as Markets in Financial Instruments Directive (“MiFID”) services were offered without the necessary permissions and licenses by utilizing its general surveillance powers.
The Italian Ministry of Economy and Finance’s Decree establishes explicit prerequisites for any digital currency service providers to offer virtual currency or digital assets services in Italy by establishing administrative sanctions if the provider contradicts the applicable rules.
In accordance with the Decree, the special unit is meant to start its operations by the 18th day of May 2022, with a two-month grandfathering timeline for service providers already operational in Italy. Beginning from that date onwards, any operator of crypto trading, any virtual currency associated services (“Providers”), cryptocurrency exchange, and digital wallet have to register in the special unit to undertake their business activities in Italy. Consequently, these providers will execute ad hoc regulations and procedures to guarantee conformity to the new Italian legal framework. Any digital assets or crypto provider that fails to register will face administrative sanctions, and the implementation of any such services shall be considered illegal in accordance with the new Italian cryptocurrency regulations.
In addition, Italy’s Ministry of Economy and Finance Decree establishes: (i) that the service providers shall be obligated to periodical disclosure upon (a) the Providers towards the OrganismoAgenti e Mediatori (concerning customers and activities undertaken in Italy) and (b) the OrganismoAgenti e Mediatori towards the Ministry of Economy and Finance; and (ii) collaboration projects between OrganismoAgenti e Mediatori and other jurisdictions, including Consob, AML, and Bank of Italy.
Several authorities have executed the Financial Action Task Force (“FATF”) suggestions regarding virtual asset service providers, such as the Netherlands, the United Kingdom, France, Ireland, and Spain, to name but a few. The chances are that the effect of these new recommendations in Italy will follow suit, with several existing providers exiting the Italian market while others are seizing the opportunities presented by the current regime.