Newsletter no. 21

On 17 February 2022, the Decree of the Ministry of Economy and Finance (“MEF Decree” or “Decree“) was published on the Italian Official Journal, setting out the methods and timing by which providers of services related to the use of virtual currencies and providers of digital wallet services are required to register and disclose their operations in Italy.

The MEF Decree has extended to providers of services connected with the use of virtual currencies[1] and to providers of digital wallet services[2], who intend to carry out their activities, also online, in Italy, the rules laid down for foreign currency exchanges, with particular reference to the obligation to register with the Organismo per la gestione degli elenchi degli Agenti in attività finanziaria e Mediatori creditizi (the Agency for the management of the lists of financial agents and credit brokers, also “OAM“) and the notification of transactions carried out in cryptocurrencies.

OAM registration requirement

The registration requirement in a special section of the Currency Exchange Register held by the OAM is to be made through the online communication to the Agency as envisaged by Paragraph 2 of Article 17-bis of Legislative Decree 141/2010 and it is subject to the fulfilment of the same requirements that apply to entities carrying out currency exchange activities according to Paragraph 3 of the same article.
In other words, this implies that those operating in the world of cryptocurrencies will be identified in the same way as currency exchange and money transfer.

The registration requirements differ depending on whether the parties are: (i) natural persons, who shall have Italian citizenship or citizenship of another Member State of the European Union and domicile in the territory of the Republic of Italy, or (ii) persons other than natural persons, who shall have their registered office and head office or, for EU persons, their permanent establishment in the territory of the Republic of Italy.

Those who are already providing such services at the launch date of the special section of the Register (scheduled by 18 May 2022 according to the OAM press release of 18 February 2022) will have to comply with the communication requirement within 60 days from the launch of the special Register’s section. Obviously, these entities shall meet the requirements set out by the above mentioned article 17-bis.

Within 15 days from the receipt of the communication, OAM, having checked the compliance and completeness of the communication, accepts or denies the registration in the special section of the Register.

The purpose of the said communication to OAM is to ensure that the Ministry of Economy and Finance (“MEF”) acquires all information about the size and operations of the market in question. In fact, OAM is required to submit a periodic report to MEF containing the following information:

• aggregate data on the number of service providers of virtual currency and digital wallet services registered;
• cases of unauthorized activity; and
• the type of services provided and the relevant operation.

MEF Decree specifies the information that must be submitted in the communication for the purposes of registration in the Register (Article 4 “Special section of the register“) and grants the delegated powers to OAM of suspension and cancellation from the special section, and sets out the duty to cooperate with MEF, other supervisory authorities in the sector, UIF, Anti-Mafia Investigation Division, Guardia di Finanza and National Anti-Mafia and Anti-Terrorism Division in order to facilitate the exercise of their respective institutional tasks.

Transaction reporting requirement

Article 5 of MEF Decree provides for the transmission of data on transactions carried out on the national Italian territory on a quarterly basis. Such notification shall be made using the template contained sub Annex 1 of the Decree, which regulates the details of the information to be transmitted.

The new, secondary, legislative intervention, after the application of the anti-money laundering rules, seems to confirm that the phenomenon of digital currencies is spreading not only worldwide, but also in Italy. So strongly that the legislator has felt the need to strengthen control by introducing the afore mentioned obligations for market players to register and to report crypto transactions.

This is basically the first survey of this market (in Italy), which could have a revolutionary impact on the nature of virtual currencies that until now have flourished also thanks to the fact that they existed in a parallel unregulated or less regulated world.

Having said that, if the goal of avoiding illegal money transfer mechanisms and cryptographic frauds in the world of cryptocurrencies is certainly admirable, certain concerns about the practical consequences in terms of regulatory arbitrage may remain, with major market players (operating under lighter regulation than in other countries) possibly deciding to exit the Italian market.

Legália will continue to monitor future developments in this area and in the meantime we remain available for further clarification and assistance in relation to the topic of this NewsLetter and/or related matters.