Italy’s Central Bank to Release Guidelines on Implementing EU Crypto Regulations

Italy’s central bank, led by Governor Fabio Panetta, has announced plans to publish guidelines on how to apply the upcoming European Union (EU) crypto regulations.

During a speech to the Italian Banking Association, Panetta revealed that the guidelines will be released “in the coming days” and will aim to facilitate the effective implementation of the EU’s Markets in Crypto-Assets Regulation (MiCA).

The guidelines will also focus on protecting cryptocurrency holders.

EU’s MiCA Regulation

MiCA introduces two primary categories of tokens: asset-reference tokens (ARTs) and electronic money tokens (EMTs).

Panetta highlighted that, according to the Bank of Italy’s findings, only EMTs can fully serve as means of payment while maintaining public trust.

EMTs are linked to a single official currency, such as a stablecoin backed by the US dollar.

In contrast, ARTs have their value pegged to one or more assets, like the gold-backed token PAX Gold (PAXG).

During his speech, Panetta referred to Bitcoin and Ether as examples of “unbacked crypto-assets” that lack intrinsic value and likened them to a form of gambling.

He noted that the primary objective of investors in such assets is to sell them at higher prices.

Panetta also expressed concerns about potential tax evasion and the use of cryptocurrencies for money laundering and terrorist financing due to their lack of regulation.

While acknowledging that the number of investors in unbacked cryptocurrencies who may be unaware of the risks is currently low but not negligible, Panetta warned that their numbers could increase in the future.

Italy Enhances Crypto Market Surveillance

Italy has recently taken measures to bolster its oversight of cryptocurrency markets in line with the MiCA regulatory framework.

These steps aim to enhance surveillance, counter insider trading, and prevent market manipulation within the realm of digital assets.

The new decree introduces stringent measures to mitigate risks associated with cryptocurrencies.

It includes substantial fines ranging from $5,400 to $5.4 million for offenses such as insider trading, market manipulation, and unauthorized disclosure of confidential information.

It is worth noting that implementing the MiCA regulatory framework, which was initially approved in 2022, has presented challenges for blockchain companies and decentralized finance (DeFi) protocols.

DeFi protocols are required to either achieve full decentralization or comply with the Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations outlined in the MiCA framework.

While fully decentralized networks are exempt from reporting obligations under MiCA, protocols that employ foundations and intermediaries to facilitate decentralized communities may struggle to meet MiCA’s criteria for sufficient decentralization.

Consequently, these DeFi protocols must choose between achieving complete decentralization or accepting the necessity for users to provide verification data.

Last month, the MiCA regulatory framework related to stablecoins took effect.

Under the new rules, companies must stop issuing non-euro-denominated stablecoins used as a “means of exchange” if they cross a threshold of more than 1 million transactions or a value of over 200 million euros (US$215.2 million) per day.