MiCAR Regulation, new Bank of Italy communication on cryptocurrencies: what changes

July 20, 2024The Bank of Italy has published a new Communication on the implementation of the Regulation (EU) 2023/1114 on cryptocurrency markets (MiCAR). This update represents a significant step towards harmonized regulation of cryptocurrencies in the European Union, with the aim of reducing regulatory uncertainty and ensuring market stability.

Details of the MiCAR regulation

THE MiCAR Regulation introduces a harmonized framework for the issuance, public offering and provision of services relating to crypto-assets. It identifies three main categories of crypto-assets:

1. Electronic Money Token (EMT): they aim to maintain a stable value by referring to the value of a single official currency.
2. Asset-Referenced Tokens (ART): aim to maintain a stable value by reference to another value or right, or to a combination of both, including one or more official currencies.
3. Cryptocurrency‘other ‘than’: a residual category that includes cryptocurrencies other than EMT and ART.

Important deadlines

• June 30, 2024:The rules on the issuance, public offering and admission to trading of EMT and ART will come into force.
• December 30, 2024: All provisions of the MiCAR Regulation will be fully applicable.

Communication objectives

The Communication from the Bank of Italy aims to:

• Inform stakeholders on the new rules and the implications for their businesses.
• Highlight the differences between the various categories of cryptocurrencies and their risk profiles.
• Promote awareness of the potential risks associated with the use of cryptocurrencies, in particular their suitability as a means of payment.

Differences between cryptocurrencies

The Bank of Italy emphasizes the importance of distinguishing between different types of crypto-assets. In particular:

• Crypto-assets ‘other than ‘ are generally considered unsuitable as a means of payment, especially if they are not secured by underlying assets (so-called ‘unsecured’).
• The arts can fluctuate in value, making them less reliable as payment instruments.
• EMTInstead, they are considered suitable for payment functions by virtue of their stability linked to an official currency.

Implications for operators

Industry operators should:

• Ensure compliance with the new anti-money laundering and anti-terrorism regulations.
• Ensuring transparency and correct behavior.
• Evaluate the effects of their initiatives on the proper functioning of the payment system.

National regulatory compliance

At the national level, the draft legislative decrees to adapt the national regulatory framework to the MiCAR and the TFR recast were submitted to public consultation on 20 February 2024. The Bank of Italy and Consob will be designated as competent authorities for the supervision of cryptocurrencies. In particular, the BoI will have powers in matters of prudential supervision and transparency for EMT and ART issuers.

Future implications

The BoI encourages all interested parties to contact the relevant bodies to initiate initiatives compliant with the new regime. A further communication will be published to provide detailed guidance on how to submit the documentation required for regulatory compliance. With this communication, the BoI demonstrates its commitment to ensuring the stability and transparency of the cryptocurrency market, contributing to a safer and more regulated environment for all operators and users.

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