When some countries see that Initial Coin Offering (ICO) is a threat to their economy, others are beginning to realize the value that this fundraising method brings to their economies. It is the case of Italy, where ICO regulations in Italy are currently being surveyed and developed to create a clear legal framework. Since Italy is a member of the European Union, the financial settlement framework in this country follows the EU directive and regulations.

Currently, digital token sales are not covered by any specific regulatory framework in Italy and no statement has been issued by the bank or CONSOB. Instead of that, the Italian Anti-Money Laundering Code (AML) has defined and regulated virtual currency. This guide links to more detailed guidance on Italian ICO regulations.

What is the Consolidated Law on Finance?

The Consolidated Law on Finance (Testo Unico della Finanza or TUF) is the fundamental law that regulates the financial markets in Italy. Within this framework, ICO regulations in Italy are being considered to ensure that Initial Coin Offerings comply with existing securities laws. This regulation includes the majority of the EU securities regulatory framework. Concerning the publication requirements of a prospectus, the investigation should aim to verify the following sectors.

• The digital tokens are classified as “financial products” involving financial instruments and any other investment of a financial nature.
• The existence of the communication from the issuer that has the purpose to enhance the purchase or the financial products’ subscription.
• The offer is managed by the Italian-based investors

Laws and Anti Money-Laundering Requirements

Money laundering happens frequently in the non-bank financial area including the golden market, the casinos, and else. Italian anti-money laundering regulations are based on European Union legislation and FATF (Financial Action Task Force) recommendations.

The definitions of virtual coins and exchangers are introduced in the Italian Anti-Money Laundering Code. Though there is no legal system to control Bitcoin bookmakers in Italy and define cryptocurrency, legislative decree no.90 of 2017 has transferred the following statute:

• Virtual coins are the digital representation of a value used as an exchange device to purchase products and services.
• These virtual currencies are also used to transfer, store, and negotiate electronically by exchangers called persons providing.
• The virtual coins are not issued or guaranteed by a central bank or a public authority. Therefore, the use, storage, and exchange of virtual currencies are not forbidden but the providers of crypto-exchange services are subject to AML regulation.

Consolidated Law on Banking

To guarantee stability and efficiency in the financial system, the Consolidated Law on Banking and the Consolidated Law on Finance empower the Bank of Italy. These laws regulate various aspects of banking and financial activity. In this context, ICO regulations in Italy are being developed. The goal is to align fundraising activities like Initial Coin Offerings with existing financial laws. Following European law, banks can carry out other financial activities except those reserved for other entities.

The Italian consolidated law on banking defines electronic money under the E-money regulation. Electronic money means monetary value stored electronically or magnetically. It represents a claim on the issuer and is issued upon receipt of funds to make payment transactions.

Payment Services Act

The legislative decree no. 11/2010 regulates the Italian payment services. According to the Bank of Italy, cryptocurrencies and tokens should not be considered e-Money. Therefore, they are not controlled by the regulatory framework on payment services.

Italy treats cryptocurrency as a medium of exchange for products or services. The Italian directives focus on protecting public interests, especially against money laundering and terrorist financing. In 2019, a regulation on transactions using an Electronic and Distributed Database (DLT) was approved. Italy became the first country to implement legal regulations for blockchain technologies.

Consumer Protection Code

As protecting the consumers is crucial for the crypto future, Italy implemented the Consumer Protection Code that has the purpose to protect these consumers when dealing with professionals. In fact, any person acting for purposes that are outside his trade, business, or profession is considered a consumer. A professional is an individual who acts for purposes related to their trade, business, or profession. It also includes anyone acting in the name of or on behalf of a trader.

This regulation applies to any ICO activity between a consumer and a professional. If the token sale happens remotely and the tokens are classified as financial services, certain rules will apply. These include banking, credit, payment, investment, insurance, or social security services under “distance marketing of consumer financial services.”