Italy: Breakthrough in Italian Cryptocurrency Regulations: Mandatory Registration for Providers and Exchanges
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The Italian Ministry of Economy and Finance (“MEF”) has issued a new decree (“Decree”) requiring virtual asset/currency service providers to register promptly in a special section of the register which will be soon to be created and maintained by Organismo Agenti e Mediatori (“OAM”), with the aim of monitoring cryptocurrency exchanges and implementing anti-money laundering controls.
For some time, national and international authorities have been increasingly monitoring the cryptocurrency markets, albeit with limited powers of intervention. On April 28, 2021, the Bank of Italy and the Italian Securities and Exchange Commission (“Consob”) issued a joint statement calling on the public and retail investors to beware of the risks inherent in “crypto-activities”. Consob also issued tailored sanctions when it found that certain services qualifying as Markets in Financial Instruments Directive (“MiFID”) services were provided without the required authorizations and licenses using its general supervisory powers. .
The decree establishes (more) clear requirements for the provision of any virtual currency/digital asset service in Italy by introducing administrative sanctions in case of violation of the applicable regulations.
In accordance with the decree, the special section will become operational by May 18, 2022 with a grandfathering period of 60 days for operators already active in Italy. From this date, any provider of cryptocurrency exchange, crypto trading, digital wallet and, more broadly, any service related to virtual currency (“Providers”) must register in the special section to carry out activities in Italy and, therefore, implement ad hoc policy announcements and procedures to ensure compliance with the new Italian legal framework. Failure to register will result in administrative penalties and the exercise of these services will be illegal.
The Decree also establishes: (i) periodic disclosure obligations for (a) the Service Providers towards the OAM (with respect to customers and transactions carried out in Italy) and (b) the OAM towards the MEF; and (ii) co-operation commitments between the OAM and other authorities, for example, AML, Bank of Italy and Consob.
A number of jurisdictions have implemented Financial Action Task Force (“FATF”) recommendations on virtual asset service providers, including the UK, Spain, France, Ireland and Netherlands, to name a few. It is likely that the impact of these new proposals in Italy will follow the pattern seen elsewhere, with a number of current suppliers exiting the market but others taking advantage of the opportunities created by this new regime.
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