Italy to Increase Surveillance on Crypto Market

Italy is set to intensify its oversight of the crypto markets to align with the European Union’s Markets in Crypto-Assets (MiCA) regulatory framework.

The new regulations will enhance surveillance of digital asset markets to prevent and penalize insider trading and market manipulation.

The decree outlines fines ranging from 5,000 to 5 million euros ($5,400–$5.4 million), depending on the severity and extent of the violations.

Introduced in 2022, the EU’s MiCA regulatory framework requires blockchain firms to make significant decisions, while decentralized finance (DeFi) protocols face the dilemma of either fully decentralizing or complying with the framework’s Anti-Money Laundering and Know Your Customer regulations.

Networks that are fully decentralized are exempt from MiCA’s reporting requirements.

However, because many DeFi protocols use foundations and other intermediaries to moderate communities, they risk not meeting MiCA’s criteria for a sufficiently decentralized network.

This situation forces DeFi protocols to choose between complete decentralization or requiring users to submit verification data, a challenging proposition for many participants.

Centralized exchange Binance has notified its European users that it is adopting a model that categorizes stablecoins as either authorized or unauthorized, in compliance with the MiCA framework, and will gradually transition users to this system.

Richard Teng, CEO of Binance, clarified that the exchange is not delisting these stablecoins from spot markets but will restrict their availability to European users for certain products.

Uphold has also adjusted its operations to comply with the EU’s regulatory changes, announcing the delisting of six stablecoins:

Tether, Dai, Frax Protocol (FRAX), Pax Dollar (USDP), TrueUSD (TUSD), and Gemini Dollar (GUSD).

Despite increasing regulatory pressure in Europe, many experts remain optimistic about the future of stablecoins, which they believe could help prevent debt crises caused by excessive fiat currency printing.

Former U.S. House Speaker Paul Ryan argued that stablecoins could help mitigate economic shortfalls in the U.S. caused by the debt-ridden dollar.

Jeremy Allaire, CEO of Circle, the issuer of USDC, also expressed confidence in the future of stablecoins, predicting that they could constitute 10% of the money supply in the next decade.

Sources:

https://cointelegraph.com/news/italian-gov-ramp-up-surveillance-cryptocurrency-market

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52020PC0593

https://ihodl.com/topnews/2024-06-21/italy-intends-increase-cryptocurrency-market-surveillance/