Regulation (EU) 2023/1114, known as MiCAR (Markets in Crypto-Assets Regulation), marks a significant milestone in European crypto-asset regulation.
In Italy, a joint statement issued by the Bank of Italy and Consob on October 29, 2024 (along with subsequent communications) clearly establishes the division of supervisory responsibilities under MiCAR. The statement outlines specific roles for both authorities and provides a detailed framework for implementing the regulation at the national level.
MiCAR establishes a unified regulatory framework for crypto-assets not covered by existing financial services legislation, aiming to harmonize regulations across Europe and enhance security for both operators and investors.
The regulation seeks to foster innovation while safeguarding financial stability, protecting investors, and maintaining market integrity.
Role of the Bank of Italy
The Bank of Italy's primary focus is prudential supervision, particularly overseeing financial system stability and crisis management (including Financial Stability, Risk Management, and Anti-Money Laundering).
Key areas of responsibility include:
- Supervision of Asset-Referenced Token (ART) and E-Money Token (EMT) Issuers
The Bank of Italy monitors these entities to ensure their financial soundness, effective risk management, and investor protection. This oversight encompasses capital requirements verification, internal governance assessment, risk control systems evaluation, and reserve management supervision.
For EMTs specifically, the Bank of Italy ensures issuers maintain high operational standards of transparency and fairness, particularly regarding token convertibility into fiat currency.
- Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT)
Preventing illicit activities is crucial, particularly regarding Crypto-Asset Service Providers (CASPs).
The Bank of Italy, following European and international AML/CFT directives, supervises CASPs' implementation of required procedures, including customer due diligence (CDD), transaction monitoring, and suspicious activity reporting (SAR). These measures help prevent cryptocurrency misuse and protect financial system integrity.
- Product Intervention Powers
The Bank of Italy, working with European authorities, can exercise intervention powers over ARTs, EMTs, and other crypto-assets when financial stability risks are identified. This includes imposing marketing restrictions, offering limitations, or prohibiting specific practices.
Consob's Role
Consob oversees investor protection, market integrity, and transparency in crypto-asset markets.
Key responsibilities include:
- Supervision of Non-EMT/ART Crypto-Asset Public Offerings
Consob oversees public offerings of tokens outside the ART and EMT categories, ensuring white papers provide comprehensive information for informed investment decisions. This includes project details, risk factors, investor rights, and issuer information.
- Trading Venue Oversight
Consob authorizes and supervises crypto-asset trading platforms to ensure transparent, efficient, and secure operations. This includes setting platform conduct requirements, preventing market abuse (such as manipulation and insider trading), and ensuring accurate digital asset pricing.
- Supervision of CASPs in terms of transparency and fairness.
Consob oversees the informational transparency and behavioral fairness of CASPs, ensuring that they provide investors with clear, complete, and not misleading information. This includes disclosure of costs, risks, and complaint handling procedures.
Coordination between the Bank of Italy and Consob
The successful implementation of MiCAR in Italy depends on effective collaboration between the Bank of Italy and Consob. The authorities maintain close coordination to ensure consistent crypto-asset supervision while avoiding regulatory overlap and gaps. This includes information sharing, joint guideline development, and collaborative working groups.
Impact on Crypto-Asset Operators
MiCAR's implementation and the defined roles of the Bank of Italy and Consob require crypto-asset operators to meet specific compliance requirements. Operators must develop comprehensive compliance strategies that address both authorities' regulations.
Compliance Requirements:
- Internal controls.
Operators must implement robust systems for risk management, anti-money laundering procedures, and client fund protection.
- Disclosure documentation.
White papers and investor communications must provide clear, comprehensive, and current information.
- Regulatory engagement.
Operators must maintain effective dialogue with both authorities, ensuring prompt responses to information requests and full cooperation with supervisory activities.
Our law firm offers expert advice to help crypto operators navigate the complexities of MiCAR and comply with regulatory obligations. We offer assistance with:
- Analysis and assessment of the impact of MiCAR on your business.
- Implementation of customized compliance procedures.
- Drafting and review of disclosure documents.
- Assistance in dealing with the Bank of Italy and Consob.
- Staff training on MiCAR and AML/CFT issues.
Frequently Asked Questions (FAQs)
- What is meant by ARTs and EMTs?
ARTs are tokens linked to assets, such as fiat currencies or commodities.
EMTs (Electronic Money Tokens) are digital tokens that represent claims on fiat currency
- How do the supervisory roles of the Bank of Italy and
CONSOB differ in regulating crypto assets?
The Bank of Italy focuses on financial stability and money laundering prevention, while Consob is concerned with investor protection and market integrity.
- How can I prepare my company for MiCAR?
It is essential to conduct a thorough analysis of the new regulations, implement appropriate compliance procedures, train staff and, if necessary, seek specialized legal advice.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
