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Italy’s Evolving Legal Regime for Cryptocurrencies and Financial Innovation
As the global financial landscape continues to shift towards digital innovation, Italy is taking steps to adapt its legal framework to accommodate emerging technologies such as cryptocurrency and blockchain-based solutions.
M-Non-Fungible Tokens (M-NFTs)
One of the most significant developments in this regard is the introduction of M-Non-Fungible Tokens (M-NFTs), which are granted interoperability across gaming platforms within the Metaverse or across different Metaverses. This development has sparked debate about whether M-NFTs can be considered Financial Products, given their increased liquidity and tradability on exchanges.
Contracts for Difference (CFDs)
In Italy, a CFD is an agreement between a buyer and a seller to exchange the difference between the current price of an underlying asset (shares, currencies, commodities, indices, etc.) and its price when the contract is closed. If the underlying asset is a crypto-asset, the relevant CFD could be regarded as a Financial Instrument under the EU’s Markets in Financial Instruments Directive (MiFID II), requiring the entity managing the platform/venue where the CFD is exchanged to comply with investment services and activities regulations.
Money Transmission Laws and Anti-Money Laundering (AML) Requirements
Italy has implemented stringent AML requirements for cryptocurrency exchanges, wallet providers, and other service providers relevant to the use of virtual currencies. Under EU Directive 2018/843, also known as the 5th Anti-Money Laundering Directive (AMLD), Italy has transposed strict customer due diligence, record retention, and suspicious transaction reporting obligations onto crypto-service providers.
Sandbox Programme for Fintech Projects
In an effort to boost innovation in the financial sector, Italy introduced a Sandbox Programme for fintech projects under Law Decree no. 34 of 2019, dubbed the “Growth Decree.” The programme has accepted projects operating in various fields, including:
- DLT-based investment funds
- Instant lending
- Algorithmic credit scoring
Mining
Italy’s mining industry is currently ranked as one of the most expensive due to high energy costs. While mining is not subject to specific regulation, the sector remains an important area of focus for policymakers seeking to promote sustainable energy solutions.
Conclusion
As Italy continues to navigate the complex landscape of financial innovation and cryptocurrency regulation, it is clear that the country is committed to striking a balance between promoting growth and ensuring consumer protection. As this space continues to evolve, it will be interesting to see how Italy’s legal regime adapts to the changing needs of the fintech sector.
About the Author
This chapter was written by [Author Name], a leading expert in their field and a member of GLI’s international panel of experts. The author has extensive experience advising on financial services regulatory matters, including cryptocurrency and blockchain-based solutions.