Regulation
The Government intensifies regulation of the cryptocurrency market
According to the new Italian regulation, the government has decided to increase surveillance on the cryptocurrency market. Specifically, introducing new measures to combat market manipulation and other financial crimes.
According to the latest draft policy, fines for these crimes can range from 5,000 to 5 million euros (equivalent to 5,400-5.4 million dollars). Let’s see all the details below.
Severe sanctions for market manipulation, Italy’s new crypto regulation
As anticipated, Italy is preparing to do so strengthen surveillance on cryptocurrency markets as part of its adherence to the European Union’s Cryptocurrency Markets Regulatory Framework (MiCA).
According to the new legislation, Italy will intensify supervision of digital asset markets to combat and punish insider trading and market manipulation.
The decree provides for sanctions ranging from 5,000 and 5 million euros ($5,400-$5.4 million) depending on the severity and extent of regulatory violations.
The regulatory framework approved for the first time in 2022 Not of the European Union is confronting blockchain companies with difficult choices.
Meanwhile, decentralized finance protocols (DeFi) must decide whether to fully decentralize their networks or comply with the framework’s anti-money laundering and identity verification (KYC) rules.
Fully decentralized networks are exempt from MiCA reporting requirements. However, these protocols take risks do not meet MiCA’s definition of a sufficiently decentralized network.
This is due to the use of foundations and other intermediaries that help moderate decentralized communities.
This implies that these DeFi protocols must be fully decentralized or accept that users must submit verification data, a difficult proposition for many network participants.
Changes in exchange business models
The centralized exchange Binance recently informed its European customers that it was moving to a model that classifies stablecoins as either permissioned or unauthorized.
Model therefore in line with the MiCA framework, and that users are gradually adopting the new system.
Riccardo Teng, CEO of the exchange giant, also noted that Binance is not removing these stablecoins from spot markets. However, it only limits its availability to European users for certain products.
Riccardo Teng, The CEO of the exchange giant also noted that Binance will not remove these stablecoins from the spot markets. However, it limits their availability for European users to certain products only.
Alike, Support has made changes to remain compliant with the EU regulatory review and announced the delisting of six stablecoins.
These include Tether (USDT), Frax Protocol (FRAX), Pax Dollar (USDP), Dai (DAI), TrueUSD (TUSD) and Gemini Dollar (GUSD).
Despite growing regulatory pressure in Europe, many experts believe that stablecoins have a promising future. Furthermore, they argue that they could potentially prevent debt crises caused by the excessive issuance of fiat currencies.
Former Speaker of the United States House of Representatives, Paul Ryanrecently said that stablecoins could help mitigate shortfalls in the US economy due to the debt-laden US dollar.
Also Jeremy Allaire, CEO of stablecoin issuer Circle, expressed optimism about the future of stablecoins. Specifically, he said he believes these will represent 10% of the money supply over the next decade.
New rules for the stability and security of crypto-assets
The European Banking Authority (EBA) recently published a comprehensive package of technical standards and guidelines in accordance with the Cryptocurrency Markets Regulation (MiCA).
Thus providing a clear guidance for asset-referenced tokens (ART) and electronic money tokens (EMT) across Europe.
The package addresses six key topics, ranging from stress test programs and capital buffers to recovery plans. According to MiCA, ART they are tokens backed by assets such as commodities, real estate or a diversified basket of assets.
On the contrary, the EMT they maintain a stable value as they are pegged to fiat currencies and used for payments, similar to stablecoins.
The authority has outlined a series of guidelines for token issuers, underlining the need for them sufficient financial resources (own funds) to cover potential risks.
Parameters are also established to identify whether an issuer has a higher degree of risk, which would require an increase in capital reserves.
The EBA guidelines specify the procedure and timeframe within which issuers must adjust their funds to 3% of the average buffer of assets classified as significant.
The implementation plan must be submitted within 25 working days and compliance must be achieved within a maximum of six months.