New measures regarding crypto-related services providers have now been passed. Following a lengthy consultation process that began in 2018, the decree of the Ministry of Economy and Finance that was approved on 13 January 2022 (the “Decree”) has been published on the Official Journal on 17 February 2022 and entered into force the next day.
In general, the Decree establishes that certain registration duties and ongoing communication obligations apply to any (natural and legal) person providing crypto-related services in Italy and for this purpose it sets out the timeframe and the means for the enrolment in the relevant register. As such, the Decree does not introduce conduct of business rules nor fit and proper requirements (but rather registration and communication obligations). This is in line with the aim set forth under the anti-money laundering framework to identify those persons providing crypto-related services.
For the sake of completeness, it is worth mentioning that the Decree implements the legislative option – exercised under Italian law in the context of anti-money laundering – to impose certain regulatory requirements to activities which may pose a risk of money laundering.
Preliminary elements
As a starting point, it is key to identify the scope of registration duties, which covers the providers of services related to the use of virtual currency and digital wallets (the “Crypto-related Services”).
The Decree applies to any person that provides third parties, on a professional basis, also on-line, with services for:
- the use, exchange, storage of virtual currencies and their conversion from or into legal tender or digital representations of value, including those convertible into other virtual currencies as well as the services of issuance, offer, transfer and compensation and any other service functional to the acquisition, negotiation or intermediation in the exchange of that currencies; and
- the safeguarding of private encryption of behalf of their clients for the purpose of holding, store and transferring virtual currencies.
Under the Decree, the provision of Crypto-related Services in Italy is reserved to persons enrolled within a special section of the register of currency exchange (the “Special Section”) maintained by the Italian body responsible for regulating and supervising financial agents and brokers, the OAM (Organismo Agenti e Mediatori).
In other words, registration duties are triggered by the provision in Italy – also through distance means of communication – of Crypto-related Services.
In the absence of specific guidance on the circumstances in which Crypto-related Services are deemed to be provided in Italy, interpretative criteria can be drawn from the guidelines of the financial services sector.
Indeed, Italian regulators are of the view that the key element to determine where a financial service and/or activity is performed is not where it is actually carried out but where the relevant entity seeks business by carrying out, by any means including client research and business development, advertising and promotion and execution of related contracts. The place is deemed to be Italy if, for instance: (i) the foreign entity’s services are offered to the investor present in Italian territory; and (ii) the foreign entity makes use of licensed intermediaries or has a representative office at the premises of the Italian intermediary.
As such, for the time being, it may be established that an entity is deemed to be providing Crypto-related Services in Italy to the extent it targets Italian residents. Further evaluations shall be made with regard to this matter and the potential impact of the registration requirements (see below) on the operations on the Italian market by foreign firms.
Registration process
For enrolment under the Special Section, providers of Crypto-related Services shall fulfil a preliminary condition, namely, the setting up of headquarters or an administrative office in Italy or, for entities located in another Member State, a ‘stable organisation’ in Italy. It is likely that further guidance may be provided in this respect given the materially onerous impact of this provision.
Subsequently, providers of Crypto-related Services shall file an application to OAM, using the dedicated portal available on OAM’s website (the “Registration Application”). The Registration Application for legal persons shall contain:
- information on the company;
- details of the company’s legal representative;
- description of the business.
OAM will approve or reject the Registration Application within 15 days from its filing. This is without prejudice to the possibility of one suspension for a maximum of 10 days if the Registration Application is deemed incomplete.
Timeframe
The implementation of the Special Section is expected on 18 May 2022 (i.e. 90 days following the entry into force of the Decree).
Crypto-related Services providers already in business at that date and fulfilling the applicable requirements shall file the Registration Application within 60 days (i.e. 18 July 2022).
Ongoing communication obligations
Once enrolled in the Special Section, providers of Crypto-related Services are subject to further communication obligations, on an ongoing basis. The subject matter of such communication covers information on transactions carried out in Italy, namely the client’s identification details and summary data on business aspects (e.g. number of transactions, volume for individual client) and it is due on a quarterly basis (within the 15th day following the reference month).