MiCAR: Bank of Italy's communication

On 22 July 2024, the Bank of Italy published a communication (“BoI Communication”) regarding Regulation (EU) 2023/1114 on markets in crypto-assets (“MiCAR”). Its purpose is to outline certain aspects of MiCAR and the impact on market players, waiting for the publication of the domestic decree adapting the Italian legal framework to MiCAR.

Among other things, according to the BoI Communication:

• both CONSOB and the Bank of Italy will be the designated competent authorities under MiCAR;

• the Bank of Italy will be the competent authority for prudential supervision on electronic money token (“EMT”) and asset-referenced token (“ART”) issuers and crypto-asset service providers (“CASPs”). With respect to EMT issuers, the Bank of Italy will also be the competent authority for transparency, fair conduct, and protection of EMT holders. It will also have intervention powers on EMTs and, in certain specific cases, on ARTs and other crypto-assets;

• CONSOB will be the competent authority for crypto-assets other than EMTs and ARTs and for transparency, fair conduct, orderly trading, and protection of customers in relation to ARTs and crypto-asset services. It will also have intervention powers on ARTs and other crypto-assets;

• with respect to CASPs, the Bank of Italy will be the supervisory authority for AML-CFT. Virtual asset service providers (“VASPs”) currently enrolled with OAM (Organismo Agenti e Mediatori) will continue to be subject to the current AML regime during the transitional period;

• crypto-assets other than EMTs and ARTs - especially when lacking intrinsic value, not referenced to any real or financial assets and not backed by any redemption rights granted to the users (unbacked) - are not suitable for performing a payment function due to their high risk nature. Market players should also pay greater attention when ARTs are offered for payment purposes. EMTs, on other hand, have a payment function;

• crypto-asset market players will need to carefully manage the risks arising from the use of technologies, DLT infrastructures, and smart contracts for the issuance and transfer of crypto-assets;

• obliged entities are required to ensure full compliance with AML-CTF requirements and to adopt adequate organisational and control measures to mitigate risks in particular with respect to: i) transactions involving self-hosted wallets; ii) users using anonymisation tools; iii) any inconsistency between the volumes and types of transactions in crypto-assets and the user profiles; and iv) connection with high risk jurisdictions.

Next steps

Perhaps most importantly, the Bank of Italy announced it is open for dialogue with market players on MiCAR. A new communication inviting market players to liaise with Bank of Italy before submitting MiCAR applications is to be published. Also, the domestic decree adapting the Italian legal framework to MiCAR, setting out - among other things - the envisaged transitional regime will be published in the Official Gazette.

The BoI Communication is available here.