Breakthrough in Italian Cryptocurrency Regulation: Statutory Registration for Providers and Exchangers
The Italian Ministry of Economy and Finance ("MEF") issued a new decree ("Decree") requiring that virtual asset/currency service providers promptly enroll in a soon-to-be established special section of the register held by Organismo Agenti e Mediatori ("OAM"), with the aim of monitoring cryptocurrency exchanges and implementing anti-money laundering controls.
For quite some time, both national and international authorities have kept an increasingly close eye on cryptocurrency markets, although with limited intervention powers. On April 28, 2021, the Bank of Italy and the Italian Securities and Exchange Commission ("Consob") issued a joint statement calling upon the public and small savers to beware of the risks embedded in "crypto-activities." Consob also issued tailor-made sanctions when it found that certain services qualified as Markets in Financial Instruments Directive ("MiFID") services were provided without the required authorizations and licences by using its general surveillance powers.
The Decree sets clear(er) requirements for the provision of any virtual currency/digital assets services in Italy by introducing administrative sanctions in case of violation of the applicable regulation.
Pursuant to the Decree, the special section shall become operational by May 18, 2022 with a 60-day grandfathering period for operators already active in Italy. From that date onwards, any provider of cryptocurrency exchange, crypto trading, digital wallet and, widely, any virtual currency related services ("Providers") must enroll in the special section to carry out business in Italy and, as a result, implement ad hoc policies and procedures to ensure compliance with the new Italian legal framework. Any failure to enroll will result in administrative sanctions and the exercise of any such services will be unlawful.
The Decree also establishes: (i) periodical disclosure obligations upon (a) the Providers towards the OAM (with respect to clients and transactions carried out in Italy) and (b) the OAM towards MEF; and (ii) cooperation undertakings between OAM and the other authorities, e.g., AML, Bank of Italy, and Consob.
A number of jurisdictions have implemented the Financial Action Task Force ("FATF") recommendations on virtual asset service providers, including the United Kingdom, Spain, France, Ireland, and the 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 providers leaving the market but others taking advantage of the opportunities created by this new regime.
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