Breakthrough In Italian Cryptocurrency Regulation: Statutory Registration For Providers And Exchangers – Technology

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Breakthrough In Italian Cryptocurrency Regulation: Statutory Registration For Providers And Exchangers

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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.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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