Italy Steps Up Surveillance of Cryptocurrency Market to Comply with EU MiCA Regulatory Framework –

Italy is taking steps to strengthen oversight of cryptocurrency markets as part of its commitment to comply with the European Union’s Cryptocurrency Markets Regulatory Framework (MiCA).

These new measures aim to strengthen supervision and combat insider trading and market manipulation in digital asset markets, according to a Reuters reports it.

According to the report published on June 20, 2024, the new decree seeks to address risks related to cryptocurrencies with stringent measures, including heavy fines of between $5,400 and $5.4 million for insider trading, market manipulation or illegal disclosure of information privileged.

The initiative is in line with European regulation established last year and designates Consob, the Italian central bank and market watchdog, as the competent authorities responsible for overseeing cryptocurrency-related activities.

The main objective of this supervision is to safeguard financial stability and ensure the orderly functioning of markets.

MiCA regulation poses challenges to DeFi projects

The implementation of the MiCA regulatory framework, initially approved in 2022, has presented challenges for blockchain companies and decentralized finance (DeFi) protocols.

DeFi protocols must fully decentralize their networks or adhere to the anti-money laundering (AML) and Know Your Customer (KYC) regulations outlined in the MiCA framework.

While fully decentralized networks are exempt from reporting requirements under MiCA, protocols that employ foundations and intermediaries to facilitate decentralized communities risk not meeting MiCA’s definition of sufficient decentralization.

As a result, these DeFi protocols must undergo complete decentralization or accept the need for users to provide verification data, which could pose a challenge for participants in these networks.

In accordance with the MiCA framework, the centralized exchange Binance recently informed its European customers of its transition to a similar model classifies stablecoins as authorized or unauthorized.

While Binance has not removed these stablecoins from spot markets, their availability for some products will be time-limited to European users.

Uphold, another platform, also made changes to comply with the EU regulatory review, resulting in the deletion of six stablecoins, including Tether (USDT), Frax Protocol (FRAX), Pax Dollar (USDP), Dai (DAI) , TrueUSD (TUSD) and the Gemini dollar (GUSD).

Despite growing regulatory pressure in Europe, many experts remain optimistic about the future of stablecoins. They believe that stablecoins have the potential to mitigate problems arising from overprinted fiat currencies and contribute to the prevention of debt crises.

The first major compliance deadline is approaching

At the end of the month, the cryptocurrency industry in the EU will face the crisis first major compliance deadline according to the approaches of the new regulatory framework.

From June 30, 2024, MiCA’s jurisdiction will extend to stablecoins. To issue such stablecoins within the EU, companies must hold an e-money license and demonstrate that they have adequate reserves to maintain the peg.

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The implementation of MiCA is part of a broader effort to align the cryptocurrency industry with traditional financial regulations.

Disclaimer: Cryptocurrencies are a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all your capital.

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