ICO Regulations in Italy
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 affects their economies. It is the case of Italy that is surveying to regulate ICOs. 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. 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 by regulating various aspects of banking and financial activity. In conformity with European law, the banks can carry out other sorts of financial activities bar those that are reserved for other entities.
As defined by the Italian consolidated law on banking implementing the E-money regulation, electronic money means electronically and magnetically stored monetary value. This is defined by a claim on the issuer which is issued on 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 as e-Money so they should not be controlled by the regulatory framework on payments services.
Since Italy considers cryptocurrency as a medium of exchange for a product or service, the Italian directives focus on the regulation to protect public interests which are related to money laundering and terrorist financing. In 2019, a regulation on transactions using an Electronic and Distributed Database (DLT) was approved and Italy became the first nation to implement the legal regulation of 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 for the professional, an individual who acts for purposes relating to their trade, business, or profession and anyone acting in the name of or on behalf of a trader.
In this regulation, any activity linked to an ICO accomplishing between a consumer and professional will conform to this regulatory framework. Additionally, if the token sale is carried out by distance and if the tokens are classified as financial services (every service having banking, credit, payment, investment, insurance, or social security nature), provisions on “distance marketing of consumer financial services” will be applied.