Italy is taking steps to enhance its surveillance of the cryptocurrency markets as part of its commitment to comply with the European Union’s Markets in Crypto-Assets (MiCA) regulatory framework.
These new measures aim to strengthen oversight and combat insider trading and market manipulation within the digital asset markets, according to a Reuters report.
Per the report released on 20 June 2024, the new decree seeks to address risks tied to cryptocurrencies with stringent measures, including hefty fines ranging between $5,400 and $5.4 million for insider trading, market manipulation, or unlawful disclosure of inside information.
The initiative aligns with the European regulation established last year, and it designates Italy’s central bank and market watchdog, Consob, as the competent authorities responsible for overseeing cryptocurrency activities.
The primary objective of this oversight is to safeguard financial stability and ensure the orderly functioning of markets.
#Italy plans to enhance surveillance of the #crypto market in line with #EU's #MiCA framework, aiming to crack down on insider trading and market manipulation.
The new regulations propose fines from €5,000 to €5 million ($5,400–$5.4 million) for regulatory breaches,… pic.twitter.com/4obgV9fIPZ
— TOBTC (@_TOBTC) June 21, 2024
MiCA Regulation Poses Challenges to DeFi Projects
The implementation of the MiCA regulatory framework, which was initially passed in 2022, has presented challenges for blockchain firms and decentralized finance (DeFi) protocols.
DeFi protocols need to either 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 falling short of MiCA’s definition of sufficient decentralization.
Consequently, these DeFi protocols must either undergo complete decentralization or accept the need for users to provide verification data, which may pose challenges for participants on these networks.
In accordance with the MiCA framework, centralized exchange Binance recently informed its European customers of its transition to a model that categorizes stablecoins as either authorized or unauthorized.
Although Binance has not delisted these stablecoins from spot markets, their availability for certain products will be limited to European users over time.
Uphold, another platform, has also made adjustments to comply with the EU’s regulatory overhaul, resulting in the delisting of six stablecoins, including Tether (USDT), Frax Protocol (FRAX), Pax Dollar (USDP), Dai (DAI), TrueUSD (TUSD), and Gemini Dollar (GUSD).
Despite growing regulatory pressure in Europe, many experts remain optimistic about the future of stablecoins. They believe stablecoins have the potential to mitigate issues arising from overprinted fiat currencies and contribute to the prevention of debt crises.
First Major Compliance Deadline Approaches
At the end of the month, the cryptocurrency industry in the EU will face the first major compliance deadline under the new regulatory framework approaches.
On 30 June 2024, MiCA’s jurisdiction will extend to stablecoins. To issue such stablecoins within the EU, companies must possess an e-money license and prove that they have adequate reserves to maintain the peg.
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MiCA’s implementation is part of a broader effort to bring the crypto industry in line with traditional finance regulations.
Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
