Author: Dr. Enea Franza


A report of the European Banca Centrale E (in short ECB) dating back to February 2015, called "Virtual currency schemes – a further analysis", accounts for the cryptocurrencies in circulation in about 500, with an estimated market capitalization in about USD 460 billion[1]. Some virtual currencies have innovative aspects compared to Bitcoin, the first digital currency in circulation, and that for this reason are called "altcoins”; These are the main ones: Dash Digital Cash (DASH), Ethereum (EHT), Litecoin (LTC), Monero (XMR), Ripple (XRP). Other cryptocurrencies, however, use the same algorithm as Bitcoin: Namecoin (NMC), Peercoin (PPC), Devcoin (DVC), Terracoin (TRC), Bytecoin (BTE), Ixcoin (IXC), I0coin (I0C), Freicoin (FRC), Joulecoin (XJO), Zetacoin (ZET), AsicCoin (ASC), Deutsche eMark (DEM), Unobtanium (UNO), Platinum Coin (PT), Blakecoin (BLC), Reikicoin (RKC), Titcoin (TIT).  DAt the time of their appearance, they have gradually established themselves as an alternative to traditional currencies but,  in parallel with their  success, there  have been increasing criticisms of their use and their possible negative impact on the economy. 

At a press conference in Brussels on 20 December 2017,  Vice-President and European Commissioner Valdis Dombrovskis, responsible for Europe and  Social Dialogue, Financial Stability, Financial Services and Capital Markets Union, called  the attention of the Chairmen of the three European supervisory authorities (EBA, ESMA and EIOPA) on the real risk of a speculative bubble on Bitcoin[2], as a result of its rapid appreciation on the market, its heightened volatility and the related risks for investors and consumers. Valdis Dombrovskis asked the supervisory authorities to update their warnings on Bitcoins "in light of recent market developments", and because in his opinion "there are clear risks for investors and consumers, associated with price volatility".

On virtual currency, in addition to the intervention of the International Organization of Securities Commissions Board  (IOSCO for short), and the recommendations of the EBA and ESMA (which we will discuss later) there is no lack of interventions by domestic supervisory authorities in the financial sector; however, a complete examination as well as being fraught with difficulties, risks leaving many doubts and certainly, being living matter,  runs the risk of being overcome. To this end, the present work will attempt a first summary of the main interventions on cryptocurrencies of the supervisory authority of national and supranational financial markets and try to clarify any trend lines.


1. DLT and blockchain. Notes.

Before going into the world of crypto-currencies and crypto assets, let's better understand the underlying technology, knownas "Distributed Ledger Technology" ("DLT")[3]. It refers toa technology based on databases ("logs") shared ("distributed") among all users ("nodes") of a computer network ("network").  In other words, a "distributed ledger" is configured as a register managed by a peer-to-peer network within which the nodes of the network – i.e., the servers connected to the network – contribute, according to the peculiarities of each DLT system, to[4] the creation, maintenance and updating of the registry. The nodes of the network operate independently of each other minimizing or eliminating the intervention of a registry manager/ administrator who performs the control and validation functions of the information entered in the register itself by centralizing them and, there is because, through special technical-computerized consent mechanisms, the network participants reach an agreement on the information to be included in the register.[5]

In computing, a peer-to-peer ("P2P") network is a group of two or more devices (commonly referred to as "nodes") - for example, mobile devices, computers, etc. - set up to exchange information with each other in the absence of a central server acting as a shared unit in which data is stored.

At present, the types of DLT most used for the creation and circulation of crypto assets are those based on specific blockchain technology, related, for example, to bitcoin transactions. Blockchain technology has peculiar characteristics compared to the generalities of systems based on distributed ledgers. In particular, the blockchain is structured as a chronologically ordered succession of blocks containing information and related to each other based on a mechanism called "append-only ledger" (hence the expression blockchain, literally: "chain of blocks") whose computer security is guaranteed by a system of cryptographic rules and[6] Algorithms. Based on the operating mechanism, only new information can be added to the register (always grouped into blocks) without being able to intervene (with a modification or deletion) on the information already incorporated in the blocks present in the blockchain. In blockchain, therefore, the control of the evolution of the data entered in the register is shared among all the participants of the network since each node keeps, within itself, a constantly updated copy of the register itself in which, in an immutable way, the information entered therein is kept track.[7]

For purely classifier purposes, blockchains can essentially be divided into two macro-categories, namely, public blockchains (so-called public blockchains, permissionless) and land private blockchain (c.d.  permissioned). The former is open, freely accessible, and completely decentralized and without any restrictions on accessor (and therefore anyone can become a node of the network and participate in the transaction validation process). The most well-known blockchains of this type are the Bitcoin and Ethereum blockchains.  The latter, on the other hand, are closed blockchains, not freely accessible and characterized by the fact that access to the network is restricted to some authorized participants and, therefore, the process of validating transactions is delegated to a small group of nodes that in fact exercise a form of control over the "chain".

Unlike public blockchains, permissioned blockchains need governance that defines their access rules, validation principles and governs their activity.[8]

Alongside these types there are some blockchains that adopt so-called hybrid solutions and which, therefore, have mixed characteristics between those of private blockchains and public blockchains. In these blockchains, participation in the network is private. That is, access to network resources is controlled by one or more entities. However, the ledger is publicly accessible. This means that anyone can explore everything that happens on that blockchain block by block. These types of blockchain networks are very useful for governments or business organizations that want to store or share data securely[9]. The goal of applying this blockchain model is to maintain a high level of transparency and trust.


1.1 The information entered in the blockchain and the consensus protocols.

The information entered in the blockchain constitute records of transactions, i.e., events (e.g., transfer) related to a given asset (both tangible and intangible such as, for example, a digital token). Once entered into the system by individual users of the network, transactions are placed in a specific "waiting environment" (the "environment" takes, for example, the name of "mempool" in the Bitcoin blockchain and "transaction pool" in that of Ethereum) to be  then selected by certain nodes – the so-called miners – in order to be controlled, validated and inserted into a block of the chain up to the capacity of the same[10]. The number of transactions that can be contained in a block varies depending on the maximum capacity – expressed in bytes – of the blocks of the blockchain and the size of the different transactions that must be included in it.  In this way, miners[11] start the process of creating a new block of the chain using the specific "consensus protocol" used in the blockchain. The "consensus protocols" can be defined as systems that in the blockchain context allow the components of the network to reach agreement regarding the individual "states" of the blockchain, that is, the groups of information from time to time recorded there. In this respect, the practice knows different technical solutions, based on algorithms.  The consensus protocols, to date, perhaps, most widespread are the Proof of Work (also "PoW", literally "proof of work") and the Proof of Stake (also "PoS", indicates the "proof that you have an interest").

The first system, used for example by the bitcoin protocol, is based on a huge use of computational resources to solve a complex mathematical problem (so-called "mining"): the node that, first, manages to solve this problem communicates the block created to the other nodes of the network that verify the correctness of the solution. If 51% of the nodes believe that the solution is valid, the new block is added to the chain and the miner wins a reward in bitcoins, ("block reward"). This remuneration system ensures that miners are incentivized to continue competing to create new blocks in the chain.[12] The Proof of Stake replaces the process of solving a complex mathematical problem described above with a system in which a node of the network is randomly identified, called to validate the transactions, create the new block of the chain, and insert it into the blockchain. This node is selected within a particular circle of nodes, called validators; To be recognized as "validators", the nodes bind part of their tokens (through a system called "stake") which they cannot dispose of for other purposes. The factors that are usually considered in the selection of the node that can validate the transaction are the amount of assets "constrained" by the validator and the extent of the period in which these assets have been kept bound (so-called "coin age").

The Proof of Stake is based on the presumption that the more assets a user owns and the longer he owns them, the less his interest will be in attacking (or, in any case, prejudice) the system of which he is a part; The random system of node selection from time to time responsible for validating transactions allows to mitigate the risk of centralization of validation functions in the hands of a few users. At the end of the process of creating a block, the latter (and, therefore, the information contained in it) is uniquely identified by an alphanumeric string of fixed size generated by a particular cryptographic function (so-called hash function). This function operates unidirectionally, making it extremely difficult to trace the output of the calculation process to the data present in the "block" (input of the function) from which it was generated.


1.2 The formation of the "chain" of blocks.

Sleight the computer profile and on specific reference to the structure and content of the blocks of the blockchain it should be noted that they are blocks of data (formed by bits) composed of two main parts: the header and the body. The information relating to the transactions of the block is enclosed in the body; in the header, instead, there are the management information of each block, including the indication of the hash of the previous block (so-called "PrevHash"). This element gives the blockchain that particular "chained block" structure mentioned above, and which guarantees the security of the chain. In this regard, consider that if, hypothetically, a block of the chain was tampered with (hacked), the hash of that block would be automatically modified; Consequently, the concatenation of that block with the next block (which no longer contains the valid hash of the previous block) and, by effect, with all the subsequent chain of blocks would no longer be "valid".

The detected characteristics of the blockchain make this technology basically secure – because it is able to guarantee that, before being entered in the register, the information is validated by the majority of nodes – and, at the same time, decentralized – because it is based on suitable mechanisms to ensure "trust" between users and to ensure that each of them keeps a constantly updated and shared copy of the register. At the same time, since information is recorded in the blockchain through the creation and insertion, according to a predetermined timing, of one "block" at a time and since each block can contain a limited number of transactions, the blockchain is characterized by poor "scalability", that is, by poor ability to tolerate the recording of numerous transactions at the same time.

The "scalability" is therefore related to the dimensional limit of the "blocks of the chain" and the timing of their formation. In the literature, the above is known as the "blockchain trilemma", a term with which, in fact, alludes to the tendency that a technology can simultaneously guarantee high levels of certainty in records (security), absence of a central "validator" entity (decentralization) and speed of management/execution of the information entered therein ("scalability").


2. Virtual currencies: definition.

Now that we have a clearer understanding of the technology behind virtual currencies, let's resume the analysis on the role and functions of the new digital currencies. As is well known, economists assign different functions to currencies and, among these, in the first place that of being a medium of exchange, but of being a unit of account and a store of value[13]. The presence of all three such characteristics approximates us to the definition of money. Moreover, in all countries with advanced economies, official currencies have a pyramid structure.[14]

Virtual currencies (also called cryptocurrencies) are represented only by numbers written to a computer. Cryptocurrencies do not represent debts payable in banknotes. In the case of cryptocurrencies such as bitcoin, for example, the numbers representing bitcoin accounts are not written in the computers of the banks but are written in the computers of the users. The fundamental difference from a technological point of view is this: cryptocurrencies are numbers written in individual computers and transactions take place directly without the intervention of a central entity. The guarantees of the lawfulness of the transfer are given by blockchain technology.

The money creation mechanism of cryptocurrencies is different from that of money.  The cryptocurrencies are created as remuneration of miners, i.e., entities that verify the lawfulness and correctness of transactions.  That is, cryptocurrencies are created as remuneration for some agent. The system software updates the miner's account by adding cryptocurrencies when the miner has completed his task. While the number of classic currencies fluctuates according to outstanding loans, the cryptocurrencies created are permanent.  In fact, the creation of classical currencies takes place in the banking system when a person or a company receives a loan from their bank and the consideration of the loan is credited to the account. The bank creates money by simply writing in the customer's account a number equal to the loan granted. The bank has a liability formed by the customer account and an asset formed by the loan. When the customer returns the loan, the money is destroyed.

In other words, money is also created when the central bank decides to buy securities from non-banks, for example from a pension fund. Since central banks have no direct contact with the public, to buy a security from a non-bank, the central bank uses an intermediary bank that credits the amount of the purchase of the security to the customer's account and receives a consideration from the central bank as a reserve. For this reason, with quantitative easing operations, banks have enormously increased their reserves. The banking system creates money with a zero-sum mechanism in the sense that each current account, which constitutes a liability for the bank, corresponds to an asset formed either by the debt of a customer or by a reserve created by the central bank. In the central bank's accounts, reserves credited to banks appear as liabilities corresponding to the assets of the security purchased. It is important to note that the banking system does not need deposits to provide loans and therefore can create money out of thin air.

Virtual currencies can be used as a unit of account and measure of value, having a structure comparable to fiat currencies[15]. More complex is the question of their function as a store of value, that is, or rather the ability not to deteriorate and maintain their value over time. From this point of view, cryptocurrencies, certainly, retain their value over time not losing their physical characteristics, but the absence of a regulatory framework of reference exposes them to a very high degree of volatility, which undermines their development.

In fact, while the traditional system is built in a way that avoids undue profits, cryptocurrency systems, by contrast, are not based on a zero-sum credit system. Systems such as Bitcoin create crypto money that will never be destroyed as happens in the case of the repayment of a debt that destroys money. Obviously, a cryptocurrency could be destroyed by the total collapse of the computer system that supports it. Creating cryptocurrencies is an activity that miners undertake for profit and based on rules that establish how profitable it is to create cryptocurrencies through mining. However, and this is a tipping point, these rules can be changed.  Ultimately, the absence of a central authority is no guarantee. One could also imagine a system of cryptocurrencies created to remunerate certain types of work and not just to remunerate control of the system. The fact that cryptocurrencies are, ultimately, the result of direct for-profit activities due to money creation clearly undermines trust in the system.

From the point of view of the use of cryptocurrencies as means of payment, the extreme variability of exchange rates compared to traditional currencies is an obstacle that is difficult to overcome. A business can, in fact, accept payments in cryptocurrencies for marketing or possibly ideological reasons but must protect itself against fluctuations[16].

As digital value representatives, virtual currencies are included, according to the International Monetary Fund[17] (IMF) taxonomy, in the broader category of digital currencies. Virtual currencies are notdenominated in fiat money, they have their own unit of account and are transferred between parties through Distributed Ledger Technology ([18]DLT for short) or Blockchain[19].

According to the IMF, virtual currencies can have different levels of convertibility to the real world of goods and services, national currencies, or other virtual currencies.  Created by private entities operating on the web, virtual currencies should not be confused with traditional electronic payment instruments and differ from electronic platforms aimed exclusively at favoring transactions like forms of barter and do not represent the common legal tender currencies such as, for example, the Euro or the Dollar, etc.[20].

The aforementioned ECB report classifies Bitcoin (and all other cryptocurrencies) among the virtual payment systems of the third type, namely: a) among two-way payment systems, for  which real money can be exchanged for virtual currency and vice versa (and, consequently, the purchase of both digital and real goods is allowed); b) digital,  then accepted within a specific virtual community; c) issued and controlled by its developers;  and (d) have no legal tender physical counterparty. It also excludes - in principle - the intermediation of traditional financial actors, including central banks.

As we said, most digital currencies are also united by an absence of both national and supranational regulation on the subject.

On this point the findings of the Central Banks are noted. The Bank of Italy clarifies, in a communication relating to virtual currencies that they are mere "digital representations of value, used as a medium of exchange or held for investment purposes that can be transferred, stored and traded electronically".[21] The European Central Bank has repeatedly had the opportunity to clarify that “it does not consider the so-called virtual currencies a true form of money as defined in the economic literature" and the[22] US Federal Reserve, for its part, has specified how, in the case of virtual currencies, it is basically systems without authorization"... while the financial industry must be based on a regulated system" [23]. This position has opened a serious legal debate.  In recent years, European and non-EU international supervisory authorities have focused their attention on the phenomenon of virtual currencies trying to identify and what risks may derive, in the absence of legal regulation, to the stability of the "real” financial system and to the digital consumer.


3. Le misuras adopted bynational courts

Recent research conducted on 246 countries shows that digital currency is legal in 99 countries, limited to 7 countries, illegal in 10 countries, while in the remaining countries the discipline remains confused.[24] In Syria, by reducing the phenomenon to geographical areas, we can point out that North America and Western Europe are the areas in which the phenomenon of virtual currencies is in fact accepted, albeit with attitudes that are not always clear and unambiguous.

The U.S. federal government, for example, has not exercised its constitutional prerogative to regulate Blockchain, the technology at the heart of Bitcoin, as it does with financial rules. It follows that, now, each State is free to introduce its own regulations. In June 2015, New York State became the first to regulate companies engaged in the virtual currency industry through a state agency. In 2017 at least 8 states worked on legislative proposals that accept or promote the use of Bitcoin and Blockchain and at least two of them have already passed laws in this regard. In Arizona, for example, smart contracts have been legally recognized, in Vermont the blockchain and in Delaware the aim is to authorize the registration of shares held in the form of blockchain by companies located in that state.  In addition, in July 2017, the U.S. Commodity Futures Trading Commission granted permission to exercise to LedgerX, operator of a cryptocurrency trading platform, which debuted in October, making it the first federally regulated digital currency trading location. It should be noted, however, that under the impetuous growth of Bitcoin, in November 2017 voices of the US Treasury Department announced their intention to provide for a review of the practices related to cryptocurrencies where there are risks of money laundering and terrorist financing[25].

In Germany, cryptocurrencies are still considered a "unit of account" and, as such, a financial instrument under national law. In France, on the other hand, a public consultation has just been concluded and the authorities will consider introducing ad hoc provisions to protect the investor, but also to the benefit of innovation[26]. Faced with a general openness, however, a commission of the Ministry of Finance is studying to draw up rules to supervise the development of virtual currencies with the aim of avoiding the "high risks of speculation and possible financial manipulation".  In this field, France and Germany intend to combine "... We will have a joint Franco-German analysis of bitcoin-related risks, settlement proposals and these will be presented as a joint proposal to our G20 colleagues at the G20 summit in Argentina in March,” French Finance Minister Bruno Le Marie told reporters[27]. In Spain, the supervisory authorities are currently assessing the phenomenon.

About ICO's and subsequent token resales, they are usually qualified as a simple gambling and virtual currencies as commodities and or utilities. In Canada, however, ICO’s enjoy exemption regimes where compliance with several conditions is guaranteed, such as the prohibition of resale (therefore to be traded on digital trading platforms the coins / tokens issued against an ICO must be attributable to commodities / utilities or must be registered as securities offerings). In other jurisdictions (e.g., Isle of Man), ad hoc rules have recently been introduced to grant authorities powers to supervise the sector to protect investors (e.g., registration obligations, supervisory and inspection powers, transparency, rules of conduct in distribution), while trying not to inhibit innovation.

The Middle East appears to be very divided over the currency, with Iraq, Iran, and Turkey as legal markets for Bitcoin, while Afghanistan, Pakistan, Saudi Arabia and Egypt with varying levels of restrictions on cryptocurrency.

The countries of the East appear much more closed. Russia is currently the largest country where cryptocurrency is illegal[28], although itwould be working on a bill that should arrive by the end of the year and which therefore aims to regulate the procedures for buying Bitcoin and similar (one of the hypotheses is through the registration of those who buy them).  The plan, outlined on the website of the Russian Ministry of Finance, is to allow the sale and purchase of digital coins (using rubles or foreign currencies) through special companies, created to facilitate the exchange of digital financial assets.

China and South Korea are the last two major countries to intensify control and regulationof its use, resulting in many economists' recent sell-off in the cryptocurrency market, given that these countries are the most important countries. They have, historically, contributed a lot of liquidity to the emerging market. Remember that China has become the largest Bitcoin production and exchange market in the world[29]. In August 2017, China declared illegal the Initial Coin Offerings, that is, the most used tool for fundraising based on cryptocurrencies and since October 11, ICO's have been subject to prohibition because, among other things, they are considered currency issues contrary to the restrictions on capital movements in force there. The ban, however, seems to apply only to banks. Banking institutions and their employees cannot sell or buy Bitcoin through banking services, nor offer services or do business with the Bitcoin industry.

Recently, the deputy governor of the Central Bank of China, Pan Gongsheng called for blocking all websites and apps that allow centralized exchanges of virtual currencies. Instead, it would not seem illegal at least for ordinary citizens to trade in Bitcoin.  In January 2018, theSeoul authorities announced that local banks will not be able to process transactions from anonymous accounts for cryptocurrency trading, with the stated aim ofmaking transactions traceable and transparent and curbing money laundering and criminal activities, as well as speculation and tax evasion.


4. The positions of international institutions. IOSCO and Financial Stability Board (FSB) communications

Virtual currency trades and  Initial Coin Offerings ("ICOs") have recently attracted the attention of both Financial Stability[30] and  IOSCO[31], as  well as the EU financial authorities EBA and ESMA, given the novelty and the growing diffusion of the phenomenon, the lack of a recognized definition of the nature of these instruments/transactions, the absence of a legal framework capable of guaranteeing transparency and correctness of behavior and the use of particularly aggressive marketing techniques (via the web) also towards retail investors by operators of exchange platforms.

The need for a common denominator arises from the assessment that, depending on national law and the configuration of rights accessible through virtual currencies, such transactions can be traced back to trading, i.e., the offer of a new communityor cryptocurrency (generally not subject to regulation), i.e.  of a financial product, an investment contract or even, in some jurisdictions, a transferable security (e.g., in the presence of a secondary market or a right to receive part of the profits deriving from a project). As trading, i.e., virtual currency offerings take place on web-based platforms and are accessible to potentialinvestors around the world, the phenomenon is becoming widespread and relevant on a cross-border basis.  At the same time, we are witnessing a new phenomenon, linked to the development of a cryptocurrency derivatives market and a[32] growing interest of investment fund managers in these products, also due to the very high returns recorded in some successful operations. At the same time, it is a sector characterized by extreme price volatility in a very short time and largely developed outside the scope of financial regulation, therefore more easily a harbinger of opacity and fraudulent phenomena[33].

IOSCO published a press release on 18 January 2017 to alert about the risks associated with ICO's also due to the highly speculative nature of this type of investment[34]. Similarly to "equity crowdfunding" operations, the issuing company raises capital from the "crowd" on the web;  the assets  offered by the issuer, however, are not shares in the capital of the company or bonds, but precisely the so-called "tokens", i.e. digital assets (encrypted codes that allow certain functions to be performed through smart contracts) which, after the closure of the ICO, can be used to access new projects generally still at an early stage of development. Therefore, the sale of tokens gives the company access to the resources necessary to develop a digital project that are generally related to the development of a new platform/blockchain or new features or applications in existing blockchains, which can be accessed with the new cryptocurrency/token. Typically, if the project is successful, token purchasers will not only be able to use the tokens, if interested, to access the utilities derived from the project or the new application, but also financially benefit from the appreciation of the tokens themselves. In fact, in some operations the tokens grant the right to obtain a part of the returns of the project (similarly to a financial product). Moreover, more and more frequently, tokens are traded on an informal secondary market (e.g., web platforms on which supply and demand meet, typically outside regulation); Therefore, the original purchasers will be able to speculate by reselling them at a higher price than the one originally paid.

A passage from the statement reads: "ICOs are highly speculative investments where investors are putting their entire invested capital at risk. While some operators offer legitimate investment opportunities to fund projects or businesses, increasing targeting of ICOs to retail investors through online distribution channels from parties often located outside an investor's jurisdiction – which may not be subject to regulation or may operate illegally in violation of existing laws – raises investor protection concerns. There have also been cases of fraud and, as a result, investors are reminded to be very cautious when deciding whether to invest in ICOs."

In addition, the press release dedicated to ICO's informs of the establishment of an Internet page from which it is possible to access the various statements / warnings issued by the national authorities of the sector to raise awareness among investors on the issue[35].

Moreover, within the Financial Stability Board, work is underway on the topic of ICO's[36] and virtual currencies by the Financial Innovation Network, an informal group set up by the Standing Committee for Vulnerability Assessments. The aim is to draft briefings on potential implications for financial stability by spring 2018 and to monitor the characteristics and size of the global ICO's and virtual currency market.


5. The EBA and ESMA communications.

As anticipated, many supervisory authorities have recently undertaken ad hoc initiatives, such as the publication  of warnings or statements, to alert the investing public about the potential risks underlying trading on virtual currencies and/or ICOs (e.g. loss of entire capital; lack of transparency; fraud, hacking) and  the organizers of ICOs regarding the possibility that the operation in practice falls within the scope of application of the sector legislation and can therefore be considered abusive, if carried out in the absence of the necessary authorizations (eg for lack of a prospectus).

Both EBA and ESMA intervened in this context. The EBA published, in October 2012, a substantial investigative-scientific study[37] for the stated purpose "...to provide clarity on the topic of virtual currencies and tries to address the issue in a structured approach. Such an approach has been absent, at least to some extent, from the existing literature». The study is the first analysis of the problem and, as the authors themselves point out, is largely based on information and data collected from material published on the Internet, given the lack of references on this subject in the publications of central banks, international organizations, or public authorities.   In this report, virtual currencies are defined as digital representations of value that are not issued by a central bank or public authority or necessarily linked toa legal tender currency, but that are used by a natural or legal person as a medium of exchange, that can be transferred, stored, and traded electronically. That publication was followed, in December 2013, by a document seeking to warn the individual consumer of the risks arising from his personal operation[38].

The aforementioned European banking user, with the obvious intention of focusing and communicating to the public the possible risks associated with the purchase, holding or trading of virtual currencies such as Bitcoin has, in the aforementioned warning, identified some critical aspects related to the circulation of virtual currencies, also in consideration of the growing space given on "...newspaper headlines" and the "growing popularity” enjoyed by virtual currencies. Recita, therefore, in the introduction the warning"...You should be aware of the risks associated with virtual currencies, including the loss of money spent" and that there are no "specific regulatory protections that could cover losses if theplatform that exchanges or holds your virtual currencies fails." At the same time, it reassures the warning"...The EBA is currently assessing all relevant issues associated with virtual currencies, to identify whether virtual currencies can and should be regulated and controlled, it is advised to familiarize yourself with the risks associated with them." The main aspects detected by the warning in question primarily concern the exchange platforms on which virtual currencies are treated, the use of the same as a payment instrument, fiscal discipline.

As for the risks of losing money on exchange platforms, the EBA highlights that the purchaseor currency can be made directly by someone who owns it (one-to-one mode), that is, through an exchange platform. A first set of problems stemmed from the fact that in several cases exchange platforms failed – in some cases due to hacking by third parties. In this case,[39] when using an unregulated exchange platform, since there is no specific legal protection - for example through a deposit guarantee scheme - covering losses arising from any funds held on the exchange platform, the failure of the platform determines the loss of money by the investor.  A further question arises, once the virtual currency is purchased, when it is stored in a "digital wallet",[40] that is, on a computer, a laptop (notebook) or smart phone. Digital wallets have a public key and a private key or password that allows access to them. However, the EBA points out in its warning, digital wallets are not impervious to hackers, and therefore money can be stolen. In addition, if you lose the key or password in your digital wallet, your virtual currency could be lost forever, as there are no agencies that record passwords or release replacement ones as and example happened in the maxi cyber-robbery of 450 million dollars in Bitcoin scored in 2014 against the company Mt Gox Exchange based in Tokyo.  Another risk relates, according to the EBA, to the use of virtual currencies as a means of payment, that is, an instrument for transactions.  Indeed, when using virtual currencies as a means of paying for goods and services you are not protected by the right to refund under EU law and even, the acceptance of virtual currencies by dealers is not permanently guaranteed and is based on their discretion and/or contractual arrangements, which may terminate at any point and without notice.  

The function of virtual currencies as a means of payment is also weakened by the instability of their value. In particular, the price of Bitcoin and other virtual currencies is subject to drastic price changes, but this implies the need to be aware of the high volatility of the value of the virtual currencies and consequently of the impact that this has. Unlike money deposited in a traditional bank or in a payment account denominated in a fiat currency, in fact, it cannot be certain that the value of virtual funds in foreign currency will remain substantially stable.

A further issue is highlighted by the warning under consideration and follows from the observation that transactions in virtual currencies are public, but the owners and recipients of these transactions are not, and this provides consumers of virtual currency with a high degree of anonymity.  It is therefore possible that the virtual currency network may be used transactions associated with criminal activities, including money laundering. However, law enforcement agencies may decide to close exchange platforms and prevent access to, or use of funds deposited on the platforms[41].

Finally, as for the tax implications, it must be considered that the value of virtual currency may or may not be subject to additional tax or capital gains tax, depending on the discipline in one's own country, which as far as ours is concerned, is currently not very clear[42]. In the Opinion of  July 2014, addressed to EU legislators and supervisory authorities of the 28 member states, the  EBA analyzed the possibility and opportunity to regulate the phenomenon, in the face of the current absence of an issuing central bank and a regulatory authority and, invited regulators  to " discourage credit institutions and electronic payment from buying, holding or selling virtual currencies", also investing the other subjects of the European Community with the issue[43].

In October 2017, ESMA published two statements on the phenomenon of "Initial Coin Offerings (ICOs)", one addressed to bidders regarding the risks of incurring regulatory violations (e.g., abusive offers) and the other to investors to warn them of the risks that typically characterize these transactions. Recall that ICO's are offers used to raise funds for companies that use DLT technology and that,[44][45][46] as highlighted above, are online auctions that allow start-up companies to finance their projects by selling tokens.  For an investor, the auction purchase (ICO) of these tokens allows you to earn from the difference between the price offered to the ICO and the quotation that the token will have later once it comes out on the trading platforms. About the first press release, ESMA points out that, depending on the specific case, the virtual currencies/tokens issued against an ICO could be attributable to the notion of financial instrument. In such cases, according to the European authority, the problem arises of the potential application of the prospectus regulation, the MiFID, the AIFMD (i.e. the directive on alternative fund managers) and anti-money laundering rules. The second press release mentions among the main risks of ICO's the fact that they can be placed (even specially) outside the scope of regulation, to be highly speculative (with risk of loss of the entire capital), volatile, illiquid, and not very transparent, as well as linked to new technologies whose security has not yet been sufficiently tested. ESMA intends to exercise[47] [48] [49], product intervention powers on certain derivative instruments, including CFDs on virtual currencies[50].

In this regard, the public consultation on the content of the measures was launched on 18 January. Finally, it should be noted that anonymity, typically associated with the circulation of virtual currencies, makes them potentially vulnerable to the risks of money laundering and terrorist financing. Thus, virtual currencies have been included in the supranational analysis of the risks of money laundering and terrorist financing (so-called Money Laundering and Terrorist Financing Risks). "SNRA") conducted by the European Commission and concluded on 26 June 2017. Within the SNRA, the European Commission concluded that at EU level: ˗ threats related to virtual currencies assume a moderately significant level (level 2 on a scale of 4) about both money laundering and terrorist financing; ˗ The level of vulnerability is significant/very significant (level 3-4 on a scale of 4) for both money laundering and terrorist financing.

It should be noted, however, that  the so-called fourth Anti-Money Laundering Directive (EU Directive 2015/849) does not contain a regulation of the phenomenon of virtual currencies and only in the proposal for the V Anti-Money Laundering Directive (on which  the political agreement between the European Parliament and the Council was reached  on 20 December last) is the extension of the obligations to prevent money laundering and terrorist financing also to "exchange" providers. services" of virtual currencies and "custodian wallet providers".


6. The Italian situation

On 30 January 2015, the Bank of Italy intervened with an ad hoc communication on  the use of virtual currencies for the declared purpose of warning the public about the differences between virtual currencies and those having legal tender, on activities relating to the issue and placement, conversion of fiat money into virtual currencies (and vice versa) and,  specifying certain aspects related to the management of the operating schemes used by subjects dealing in cryptocurrencies and, as they are carried out, could materialize, in national law, the violation of banking provisions.[51][52]

In detail, the risks on which the Bank of Italy focuses on the lack of information, the absence of legal and contractual safeguards, forms of control and supervision as well as forms of protection or guarantee of the sums "deposited". In the absence of information obligations and transparency measures, in fact, "...It can be difficult to find reliable guidance on how each type of virtual currency operates, costs, value, and risks," while the absence of legal and contractual safeguards means that "...the purchase, exchange and use of virtual currencies are not supported by legal and/or contractual safeguards similar to those accompanying fiat currency transactions; virtual currency transactions are generally technically irreversible, often not supported by a contract or complaint procedures, and counterparties are anonymous; in any case,  The lack of definitions, legal standards and disclosure obligations would make it difficult to prove in court that you have suffered unfair harm. The use or conversion of virtual currencies may also be subject to fees and fees that are not clearly stated."

The absence of forms of control and supervision and forms of protection or guarantee of the sums "deposited" has the double effect that "...the issuance and management of virtual currencies, including conversion into traditional currency, are activities not subject to supervision by the Bank of Italy or any other authority in Italy" and that in the event of fraudulent conduct, bankruptcy, or cessation of activity of exchange platforms "... There are no specific regulatory safeguards to cover losses incurred. Similarly, for virtual currency deposits with third parties, traditional protection instruments, such as deposit guarantee schemes, do not operate". The Bank of Italy, however, highlights the risks of permanent loss of the currency due to malfunctions, cyber attacks, loss.  In fact, "...the virtual currency stored in the "electronic wallet" could be lost because of malfunctions or cyber attacks; Even if the password of the "electronic wallet" is lost, the loss could be permanent, as there are no central authorities that record passwords or issue other substitutes".

The warning in question then emphasizes the characteristic connected to the absence of an obligation to accept virtual currencies which, in fact, circulate in the market on a voluntary basis[53] "...The acceptance of virtual currencies by suppliers of goods and services is based on their discretion and/or agreements that may terminate at any time and without notice. Therefore, those who hold sums denominated in virtual currency have no certainty that they will be able to use them for the planned purposes". A separate draw of attention is then placed on the high volatility of the value and the associated risks of losses.

As for the first aspect, since the value of virtual currencies is historically characterized by great volatility "...also due to the mechanisms of price formation (sometimes opaque) and the absence of a central authority able to intervene to stabilize its value", the possession of virtual currency can, according to the Bank of Italy "...entail losses even of significant magnitude in the event of holding virtual currency". As for infiltration for criminal and illicit purposes "...the virtual currency network can lend itself to being used for transactions related to criminal activities, including money laundering; Although virtual currency transactions are visible, in fact, the holders of electronic wallets and, more generally, the parties involved can generally remain anonymous; This may require the authorities to intervene to close the exchange platforms preventing access to or use of any funds held with them". Finally, there remains the question of "fiscal risks" to which those who have possession of virtual currency are exposed; in fact, the decentralized nature of the virtual currency network and the absence of regulation - warns the Bank of Italy - mean that the tax treatment of virtual currencies "...may present uncertainties and gaps, starting with the identification of the beneficiary State, giving rise to unforeseeable implications for the parties involved". Finally, consumers are alerted on virtual currency "kiosks", that is, on those devices, connected to the Internet, that "...allow you to purchase virtual currencies against payment of legal tender currencies and, in some cases, vice versa", warning that "...although apparently similar, these devices are not ATMs, do not provide for the intervention of any authorized and supervised intermediary and do not guarantee the security safeguards and legal protections of ordinary ATM / ATM equipment ".

In 2017, CONSOB also ordered the first suspensions and reports on cryptocurrencies. With resolution 19866 of 1 February 2017, the Commissione Nazionale per le Società e la Borsa (CONSOB) suspended as a precautionary measure for 90 days the advertising activity carried out by a foreign company relating to the offer to the public for cryptocurrency extraction packages. A few days later, on February 13, CONSOB reported that a website attributable to persons authorized to provide investment services and activities in Italy. The same public supervisory and regulatory institution has adopted pursuant to art. 101, co. 4 lett. c) of the Consolidated Law on Finance a measure prohibiting advertising activity carried out through a website for the offer to the public promoted by the same foreign company proposing the cryptocurrency extraction packages. CONSOB's reporting intervention also affected other companies that are not authorized to provide investment services and activities in Italy in any way and, therefore, not even through the website[54] [55] [56].

Finally, in order to census and understand the various aspects of the phenomenon, a draft ministerial decree was placed in public consultation on the website of the Department of the Treasury of the Ministry of Economy and Finance, already provided for in Legislative Decree no. 90 of 25 May 2017, which strengthened the Italian anti-money laundering legislation, providing, among other things, that service providers relating to the use of virtual currency comply with anti-money laundering obligations to prevent  Transactions made with cryptocurrencies may be used for illegal purposes.

The text, on which it was possible to send comments and contributions until 16 February, provides for anyone interested in carrying out on Italian territory the activity of service provider related to the use of virtual currency, the obligation to communicate to the Ministry of Economy and Finance. Taking up the definition introduced by Legislative Decree no. 90 of 25 May 2017, the provision in consultation clarifies that virtual currency, although “used as a medium of exchange for the purchase of goods and services" (...) is not issued by a central bank or a public authority, and therefore "is not necessarily linked to a legal tender currency". As clarified in Press Release no. 22 of 02/02/2018, the draft decree regulates "the ways in which service providers relating to the use of virtual currency are required to communicate their operations to the Ministry of Economy and Finance" and recalls that "...Traders who accept virtual currencies as consideration for any performance relating to goods, services or other benefits are also included in the reporting obligation".  

As the same communication points out, the initiative to involve through public consultation to the subjects interested in the activity of providing services related to the use of virtual currency and in any case the interested parties, "aims to carry out a first systematic survey of the phenomenon, starting from the numerical consistency of the operators in the sector who, when fully operational, will have to register in a special register kept by the OAM,  the Body of Agents and Mediators, in order to be able to exercise their activities on the national territory".

The provision of obligations and precautions for service providers relating to virtual currencies is consistent with the more stringent rules dictated by the Fifth EU Anti-Money Laundering Directive, now close to publication in the Official Journal of the European Community, of which Italy has in fact anticipated the adoption by providing as early as 4 July 2017 (date of entry into force of Legislative Decree 25 May 2017,  No 90), stricter rules on the prevention of financial crimes[57].


6.1. The Treasury Decree

As is known, in fact, operations in cryptocurrencies are generally anonymized in the identity of the subjects using the process that takes the name of pseudonymization[58] and the exchange of data takes place between two wallets identified by an alphanumeric string. In fact, therefore, the mechanism behind cryptocurrencies allows economic transactions to be carried out without it being possible to know either the subjects involved or, even less, the underlying cause. This abstractly explains how cryptocurrencies have become a source of great attraction for criminal groups that can manage their activities with them without apparently leaving traces. From another point of view, the controls put in place by the competent authorities, in turning their attention to the operational headquarters of the companies operating in cryptocurrencies (or on the place where, ultimately, the transactions took place), have made it possible to detect the same would seem almost all to favor tax havens and how, some of the managers of these companies (and the companies themselves) would already be sanctioned  for violations of anti-money laundering legislation. The d.lgs. 231/2007, as supplemented by Legislative Decree 90/2017 (implementing EU Directive 2015/849) and Legislative Decree. 125/2019 (implementing EU Directive 2018/843) art. 1 co. 2 d.lgs. Legislative Decree 231/2007 introduces the definitions of: virtual currency (letter qq), providers of services related to the use of virtual currency (exchanger, letter ff) and digital wallet services (wallet provider, letter ff-bis).

For these subjects, this results in the duties of identification and adequate verification of the customer and the beneficial owner, the obligation to retain data, abstain and report as well as the application of the cases provided for by art. 55 d.lgs. 231/2007. In addition, these entities will have to adopt appropriate internal procedures to comply with the legislation, including the permanent training of staff in the field of anti-money laundering.  For money changers, exchangers and wallet providers, registration fees in a special register have also been provided, as well as the communication to the MEF of the start of operations in Italy and adherence to the public anti-fraud system, postponing the application to an implementing decree to be issued by the MEF and the coordination of fiscal discipline.

On February 2, 2022, the decree regulating the activities of cryptocurrency operators was (finally) signed at the Ministry of Economy, which regulates the registration of cryptocurrency operators in the appropriate register to be managed by the Body of Agents and Mediators (OAM) which will have three months from the date of publication of the decree to establish this register. Registration in the cryptocurrency register, therefore, will be an essential condition for legally exercising the activity of services concerning the management of virtual currencies and services related to the digital wallet on the national territory. And, as stated above, the OAM is the exclusive and autonomous competent body for the management of the lists of agents in financial activity and credit brokers. In fact, in a special section of the list dedicated to agents in financial activity, agents who provide exclusively payment services are also registered. In particular, the provision regulates the mandatory registration of [59]cryptocurrency players in the appropriate register that must be managed by the Body of Agents and Mediators (OAM).

Established pursuant to Legislative Decree no. 141 of 13 August 2010, the OAM has legal personality under private law, in the form of a Foundation, with organizational, statutory, and financial autonomy. The OAM is required, among other tasks, to verify: the permanence of the necessary requirements for registration; compliance by members with the provisions applicable to them; the absence of causes of incompatibility, suspension, and cancellation with respect to members; the actual performance of the activity for the purpose of staying in the Lists. The OAM is also endowed with powers of investigation, inspections, and sanctions against members necessary for the performance of its institutional tasks. It is, in turn, subject to the supervision of the Bank of Italy. The statute, approved by the Ministry of Economy and Finance, after consulting the Bank of Italy, regulates the functioning of the OAM. The members of the management committee of the body were chosen by the Ministry itself from among persons with proven competence in financial, economic, and legal matters, as well as characteristics of independence such as to ensure autonomy of judgment. Through the establishment of the register, it will be, first, possible to detect the number of operators who, to date, are unknown. Not only the name of the lenders will come to light but more generally also their number, to understand what the actual numerical entity is on the territory also to strengthen the body to carry out the appropriate controls.

Incidentally, we recall that already inSeptember 2020, the FATF published the[60]Virtual assets red flag indicators of money laundering and terrorist financing with which it reiterates that the use of new technologies to quickly transfer values around the world, in addition to having potential advantages given by the speed and cheapness of payments, can be a useful tool available to criminals. In fact, the anonymity that characterizes virtual assets can allow the laundering of proceeds of crimes such as drug trafficking, illegal arms smuggling, fraud, tax evasion, cyber attacks, circumvention of international sanctions, as well as the financing of terrorism. For all these reasons, a series of anomaly indicators (red flag indicators) are highlighted that could suggest the illicit use of virtual assets, useful to support, on the one hand, VASPs, financial institutions, professionals and obliged parties to detect and report suspicious transactions and to apply a correct customer due diligence, on the other,  the Supervisory Authorities in the analysis of suspicious transaction reports and, in general,  in the supervision of anti-money laundering/countering the financing of terrorism (in short AML/CFT)[61]

The work originates from the cases that the Action Task Force (FATF) has analyzed and from a study carried out based on over one hundred cases of anomalous use of virtual assets, reported between 2017 and 2020, and are an excellent practical tool available to obliged parties and control authorities for AML/CFT monitoring activities. Clearly, the report specifies, as it is generally in the indicators, that the review of the conduct described in the report is not in itself sufficient for the forwarding of SOS, but the activity of the various obliged entities will always have to consider such conduct in a broader context and in combination with conventional risk indicators related to customers, operations, and products.

Among the indicators we remember: anomalies related to transactions, when their size and frequency denotes a series of critical issues; indicators concerning improper transaction patterns, in particular relating to new customers who activate relationships that are not consistent with their profile; indicators associated with technologies that guarantee anonymity, making VAS attractive vehicles for money laundering and terrorist financing; anomaly indices relating to senders or recipients of transactions, in particular, at the time of account activation (anonymous IP addresses, multiple accounts created by the same subject) or when it is not possible to carry out customer due diligence (insufficient, incomplete or false information about the customer, origin of funds and destination); the red flag indicators on the origin of the funds that,  from the analysis of the  cases that emerged in the document, have been shown to derive from drug trafficking, fraud, computer scams and criminal activities in general or the use of VAs originating or intended for online gambling services, the use of credit / debit cards linked to VA wallet for withdrawals of large amounts of current currency (crypto-to-plastic).

Finally, anomaly indicators linked to the geographical context are foreseen, especially related to the "exploitation" by recyclers of systemic weaknesses in terms of deficiencies in the application of FATF standards in the specific sector of VAs and VASPs. In fact, it has emerged that many countries still do not require compliance with AML / CFT requirements for subjects operating in the virtual asset ecosystem and, precisely in these "at risk" jurisdictions, we are witnessing the domiciliation of VASPs as well as the origin, destination, or transit of operations. The same subject has issued a series of guidelines of which the last update is of the current month.


7. The crypto assets. Coin and Token.

Within blockchain systems, the creation and possible and subsequent circulation of crypto assets takes place for such purposes, meaning, in general, the digital representation of a value associated with an asset (tangible or intangible), a service or a right. In this regard, within the vast category "crypto assets" it is necessary to first distinguish, as usually happens in practice, between coin (or crypto-currency proper, such as, among others, Bitcoin, Ether and Ripple) and tokens. In fact, the functioning of each of the coins currently in circulation necessarily requires the existence of its own reference blockchain within which, in fact, the coins are generated – according to the methods provided for by the programming protocols of the individual blockchains – and can circulate. For example, about bitcoin, the best-known coin, the relative blockchain "Bitcoin" is structurally programmed to autonomously release, according to precise time intervals, a predetermined number of bitcoins (which also constitute the reward of the miners employed in the validation of transactions that take place in the blockchain) in conjunction with the validation of the blocks to be added to the "chain". From a quantitative point of view, the bitcoin blockchain is programmed to release a predefined total number of BTC: it is known that the last bitcoins will be released by 2140 and that, currently, a number equal to 80/85% of the expected total of about 21 million have been issued.

The issuance and subsequent circulation of other types of tokens does not presuppose, however, the existence of its own blockchain as these "tokens" can be issued and can circulate within different blockchains that, due to their peculiar characteristics, lend themselves to this operation. In other words, anyone can issue a token by registering it on the Ethereum blockchain without the need to create their own blockchain.

Both coins and tokens – as digital products – constitute software written with different languages/computer programs and are issued at the end of a process – called, in fact, of "tokenization" – which involves the use of so-called smart contracts that allow the developer of the tokens to define the characteristics of the "tokens" to be issued (their name, the relative symbol,  the number of "tokens" to be issued, the identification of the subjects authorized to hold and/or transfer them, the rules for accessing the tokens, etc.), to release them in blockchain and to regulate their subsequent events, including circulatory ones.

In this regard, it should be noted that the bitcoin blockchain, for example, designed and built according to the contents of the well-known paper published under the pseudonym of Satoshi Nakamoto ("Bitcoin: A peer-to-Peer Electronic Cash System"), is designed to allow the release and exchange of one's own virtual currency and offers limited solutions for those who want to use it for other purposes. Other blockchains, on the other hand, developed after Bitcoin, have been designed to allow, in addition to the transfer of "their" digital tokens, also other operations. This is the case, for example, of the Ethereum blockchain which is structured like that of Bitcoin, but which also supports the execution of decentralized applications and also offers the technical tools (open source standards) for programming and releasing in blockchain, through smart contracts, digital tokens of various kinds (eg a significant number of ICOs were carried out through the Ethereum blockchain).[62]


7.1. Possible token classifications. Focus on “non fungible token (NFT)”.

From the classifier point of view, it is possible to make different distinctions between tokens depending on the characteristic examined from time to time.

The most well-known distinction is, perhaps, the one that considers the function performed by the different tokens in circulation. From this point of view, it is customary to make the following distinction: - payment token: tokens used as a means of payment or accepted as such; utility tokens: tokens that give the holder the right to receive a specific good or service; - investment token or security token: tokens that represent, depending on the assessments conducted on a case-by-case basis, financial instruments or financial products; - hybrid tokens: tokens that have a variable mix of characteristics. A further distinction is usually made between fungible tokens, i.e. interchangeable with each other, and non-fungible tokens. The latter – unlike fungible tokens – are characterized by being (allegedly) unique and indivisible since, uniquely representing a reference asset (digital, analog or "cryptographic native"), they are not fungible with each other in the sense that it is not possible to replace an NFT with another token given the intrinsic uniqueness of the good to which each NFT refers. Non-fungible tokens (or, more briefly, NFT) constitute a particular category of tokens that in recent years has found significant diffusion in various sectors: the first sector in which this technology has spread is that of art; There are also known applications of this technology in the fields of fashion, design, information, food and wine and sport.

For the sole purpose of providing a – synthetic – picture of the phenomenon, it should be noted that, in addition to the applications of NFTs to paintings, sculptures, artistic performances, songs and videos, there is news of the creation of non-fungible tokens related to the highlights of certain American basketball games4; some of the major Serie A clubs have concluded sponsorship agreements under which to create and market, with the support of sponsored operators, collectibles, made using NFT technology such as, for example, virtual stickers of the players.  There is also news of certain initiatives concerning the creations of well-known designers as well as other initiatives relating to content published on social networks.[63][64]

Taking advantage of DLT technology – characterized, as is known, by the characteristics of immutability of the register, transparency, traceability of transactions and security – NFTs are, in fact, used to uniquely certify the characteristics of a given asset – physical or digital – to which they refer, trace its origin and subsequent transfers (for example, transfers of ownership of the reference asset on the occasion of a sale). To this end, it seems useful to recall – limited to what is of interest here – the technical steps related to the creation of an NFT: - the procedure starts from the creation of a digital version (a file) of the quid to be certified (a photograph or other digital reproduction, an audio file, a video recording or, finally, digital "native" goods,  for example a video-animation made with computer programs).

In the binary language used by computers, the file is represented by a sequence of bits (i.e. digits that can only be equal to 0 or 1); - the aforementioned sequence undergoes, then, the so-called hashing: the string is, that is, applied a particular cryptographic function (i.e. the hash function) that allows you to convert a sequence of various lengths (any file) into a distinct string of predefined length.

In jargon it is said that the hash function generates the fingerprint of the file because: (i) it is extremely difficult to trace the output of the hash function to the input file, (ii) it is extremely difficult to find two files that are transformed by the hash function into the same output sequence; (iii) two input files that differ slightly (even by a single bit) are transformed into completely different output sequences; - the last step involves that the string obtained at the end of the hashing process is incorporated into a single token generated by a special smart contract and stored on a DLT platform using standardized protocols (for operations such as those described, the Ethereum blockchain is usually used, of permissionless and decentralized type). Any subsequent transfers of the token to another subject (on a sale, for example) are "recorded" in the NFT through a mechanism that allows the token holder to prove the ownership of the token (and the information recorded therein), the origin of the reference asset as well as the authenticity of the data it contains. Considering the foregoing, it seems correct to say that the NFT is a token that belongs to the category of so-called valueless tokens, i.e., those tokens whose function is exhausted in their own ownership and in the certification of authenticity of a digital asset.


7.2 Considerations on the possible financial significance of NFTs.

Considering the aforementioned characteristics, the technology in question lends itself to being used, and in fact has been used, for multiple types of goods; at the same time, it should be noted that NFTs have been applied above all to goods of particular value/value or that, more generally, exist or are created in limited numbers: this in order to uniquely identify each of these assets – in terms of characteristics and authenticity – and ensure traceability, in the case of any transfers, through registration in DLT. The phenomenon seems, in part and with the necessary distinctions, similar to that of "collecting", in which the need to ensure the uniqueness, authenticity and origin of a given good is particularly felt.

Much noted, the NFTs of which we have news do not seem to present intrinsic profiles of "financiality". In this regard, it is recalled that the "financiality" of a transaction – in order to configure a "financial product", sub species of "investment of a financial nature", other than a financial instrument – is evaluated, on the basis of the consolidated orientation, also endorsed by the jurisprudence of  legitimacy, on the basis of the agreements and / or contractual mechanisms related to the transaction from time to time considered. An investment is financial in nature if the following elements are present: (i) use of capital; ii) expectation of a return of a financial nature, i.e. a profit consisting in the increase in the resources invested, already envisaged at the time of the establishment of the contractual relationship, deriving mainly from the entrepreneurial or managerial actions carried out by third parties with respect to the purchaser of the product; (iii) taking a risk directly related to the use of capital.

Therefore, the return of a financial nature is represented by the return on the capital contributed by the investor, generated mainly by the entrepreneurial or managerial effort of the bidder (the investor entrusts a sum of money to the bidder who makes it return and pays the investor the promised remuneration). In that regard, it should be borne in mind that NFTs do not, in themselves, confer on their holder the right to receive, on a periodic basis, a predetermined or predetermined future remuneration on the basis of predefined parameters and in proportion to the price paid by the purchaser for the purchase and, therefore, do not integrate the concept of financial product within the meaning of sectoral legislation,  Nor do they fall into the typified categories of financial instruments outlined by European legislation[65].


8. I Crypto Assets. Legislative proposals at EU level.

In recent years, projects and initiatives have been launched within the EU aimed at stimulating reflections that favor a better understanding of the technological phenomena related to the so-called crypto assets.  In this context, on 24 September 2020, the European Commission, as part of the "Digital Finance Startegy", presented a package of possible interventions that intend to constitute a regulatory framework at European level capable of promoting the development and, at the same time, regulating the risks of the different types of crypto assets that, with DLT systems, can be offered on the market.

In particular, the EC has published legislative proposals for a Regulation on crypto-asset markets ("MiCA Regulation" or "MiCAR"); a Regulation on a pilot regime for market infrastructures based on distributed ledger technology ("Pilot Regime Regulation");  and a Directive amending Directives 2006/43/EC, 2009/65/EC, 2009/138/EC, 2011/61/EU, EU/2013/36, 2014/65/EU, (EU) 2015/2366 and EU/2016/23413 in order to make the European regulatory framework suitable for the orderly development of crypto-assets and security tokens.  

Although of greater interest here, it should be noted that the proposed MiCA Regulation, aimed at regulating crypto-assets that are not already regulated by other European legislative acts, aims to introduce a harmonized framework at European level for the issuance of crypto-assets and the provision of services related to them. The draft MiCA Regulation grants the European passport to both issuers of crypto-assets and providers of crypto-asset services, thus creating an integrated market at European level. This is an organic legislative proposal that, among the first in the global context, aims to prepare a regulatory framework applicable to the various types of crypto-assets on the market, from utility tokens to investment tokens other than financial instruments up to the so-called stablecoins (in the form of asset-referenced tokens and e-money tokens) and services that concern this type of product.

MiCAR provides a differentiated regime for the offer of crypto-assets other than asset-referenced tokens ("ART") and e-money tokens ("EMT") and for the offer of ART and EMT. Pursuant to art. 3, par. 1, (3) defines "asset-linked token" (ART): "a type of crypto-asset that intends to maintain a stable value by reference to the value of several fiat currencies, one or more commodities or one or more crypto-assets, or a combination of such assets.  While, pursuant to art. 3, par. 1, (4) for is defined "electronic money token" (EMT): "a type of crypto asset whose main purpose is to be used as a medium of exchange and which aims to maintain a stable value by reference to the value of a fiat currency having legal tender.

In the first case, the issuer is required to draft and publish a white paper whose content is established by the MiCA Regulation. For the white paper, prior authorization by the supervisory authorities is not contemplated, but a regime of mere prior notification to the Authority of the issuer's home Member State. The Authority has the power to request additions and amendments to the white paper, or to suspend and prohibit the offer in the event of a violation of the MiCAR.  For ART, on the other hand, prior authorization is required with reference to both the issuer and the white paper. Such authorisation can only be requested by a legal person established in the European Union and shall be issued by the Authority of the home Member State, in close liaison with the European Supervisory Authorities. Where ART is particularly significant for the internal market, supervision shall be attributed to the EBA. Finally, EMTs can only be issued by banks or electronic money institutions. The subjects, in addition to complying with the regulations ordinarily applicable to them, are also required to comply with the requirements of the MiCAR. With reference to the possible timing of the definition, adoption, and entry into force of the MiCAR, it should be noted that this legislative proposal has been the subject, in recent months, of negotiations within the Council of the European Union in which the competent European institutions and the delegations of the individual Member States took part[66].

More recently, on 24 November 2021, the Council of the European Union took its position regarding the MiCA Regulation and on 23 March 2022, after the approval of the draft text by the Committee on Economic and Monetary Affairs of the European Parliament (ECON), the text of the MiCAR was presented in the plenary of the European Parliament which did not raise objections to the launch of the so-called trilogue whose work,  according to reports from the Permanent Representation to the European Union would be destined to end by June 2022.


8.1 Internal regulatory provisions.

Crypto assets are the subject of specific attention both by the national legislator and by the European institutions. Regarding national legislation, the legislator has launched specific regulatory acts, both at primary and regulatory level, concerning crypto assets, especially about aspects related to the so-called anti-money laundering legislation. In order of time, the first step was represented by the approval of Law no. 12 of 11 February 2019, converting into law, with amendments, the decree-law no. 135 of 14 December 2018 (so-called Simplification Decree), with which the notions of "technologies based on distributed registers" and "smart contracts" were introduced into the legal system". In particular, pursuant to art. 8-ter, paragraph 1 of the aforementioned Decree, technologies based on distributed registers are defined as "technologies and computer protocols that use a shared, distributed, replicable, simultaneously accessible, architecturally decentralized register on cryptographic bases, such as to allow the recording, validation, updating and archiving of data both in clear and further protected by cryptography verifiable by each participant,  non-alterable and non-modifiable".  Pursuant to art. art. 8-ter, paragraph 2 of the same Decree, smart contract is defined as "a computer program that operates on technologies based on distributed registers and whose execution automatically binds two or more parties on the basis of effects predefined by the same. Smart contracts meet the requirement of written form after computer identification of the interested parties, through a process having the requirements set by the Agency for Digital Italy with guidelines to be adopted within ninety days from the date of entry into force of the law converting this decree".

The regulatory provisions constitute, at present, a modest framework of reference for a possible framework, from the point of view of national law, of the new legal cases based on DLT systems such as, precisely, crypto assets. Moreover, from the point of view of definition and limited to aspects related to anti-money laundering legislation, the concept of "virtual currency" has also been the subject of consideration by the national legislature. In this sense, in fact, art. 1, paragraph 2, letter qq), d.lgs. 21 November 2007, n. 231 as last amended by Legislative Decree. 4 October 2019, n. 125 (with which Directive 2018/843 / EU was transposed, so-called "V Anti-Money Laundering Directive"), defines virtual currency as any "digital representation of value, not issued or guaranteed by a central bank or public authority, not necessarily linked to a legal tender currency, used as a medium of exchange for the purchase of goods and services or for investment purposes and transferred, filed and negotiated electronically". This definition of "virtual currency" is accompanied by an equally broad definition of service provider relating to the use of virtual currency (Article 2, paragraph 2, letter ff): "any natural or legal person who provides third parties, on a professional basis, including online, services functional to the use, exchange, storage of virtual currency and their conversion from or into legal tender currencies or digital representations of value,  including those convertible into other virtual currencies as well as issuance, offer, transfer and clearing services and any other service functional to the acquisition, negotiation or intermediation in the exchange of the same currencies". It is also defined as a provider of digital wallet services (Article 2, paragraph 2, letter ff) - bis) "any natural or legal person who provides, to third parties, in a professional capacity, including online, services to safeguard private cryptographic keys on behalf of its customers, in order to hold, store and transfer virtual currencies"[67].

More recently, on 17 February 2022, the decree of the Ministry of Economy and Finance of 13 January 2022 on the registration of service providers related to the use of virtual currency and digital wallet service providers in a special section of the Register of Currency Exchangers kept by the Body of Agents in Financial Activity and Credit Brokers (OAM) was published in the Official Gazette. As part of this decree, a special section of the Register of Money Changers held by the OAM is envisaged, where subjects who "intend to carry out their activities, including online, on the territory of the Republic" must register.  In defining the activities of "services related to the use of virtual currency" and "digital wallet services", the MEF decree borrows the notions already contained in d.lgs. 21 November 2007, n. 231 where it is provided, as mentioned above, that these activities can also be provided through "online" channels. The decree also regulates the timing and way the Special Section of the Register must be established and kept as well as those that will govern the registration of operators in the same section, subject to verification of the possession by the OAM of the requisites provided for this purpose. In particular, in order for service providers to operate, even online, in the Italian territory, it is envisaged that they establish their "registered office and, if different from the registered office, the administrative headquarters" in Italy (in the case of non-EU operators) and, "for subjects with registered office in another Member State of the European Union, the headquarters of the permanent establishment in the territory of the Republic"[68].

As part of the communication that operators must make to the OAM to obtain registration in the Special Section of the Register, it is provided that they must provide, among other things, "the indication of the number and address of the physical points of operation, including any automatic teller machines (ATMs), and / or online operations with the indication of the web address through which the service is carried out ". With reference to the sanctioning apparatus, the decree provides that the abusive exercise of services relating to the use of virtual currency or digital wallet (i.e., if these activities are carried out by subjects not registered in the special section of the Register) is subject to administrative and pecuniary sanction. The procedure provides that the ascertainment and contestation of the offense are delegated to the police forces identified by the MEF Decree and that the sanction is imposed by the Ministry of Economy and Finance[69].


8.2 The cases in which crypto assets are relevant for the supervision of financial abuse.

At present, crypto assets are important in two respects. A first aspect concerns the profiles of contrast to financial abuse where they are used in the context of transactions suitable for outlining reserved activities or subject to the fulfillment of the administrative obligation of the prospectus. The other, on the other hand, concerns the methods of placing those products and the advertising aspect. With reference to the supervisory experience gained in the fight against abusive financial intermediation, the most frequent case in which the use of digital assets is found is that of trading services (offered to users through web platforms) on Contract for Difference (CFD). In these cases, crypto-assets – and especially cryptocurrencies – constitute the underlying of a derivative contract and, therefore, of a financial instrument. According to this contract, the difference in value of the exchange rate of a pair of crypto-assets/crypto-currencies (or a currency pair in which one of the two is "crypto"), accrued between the moment of "opening" and the "closing" of the contract itself is exchanged. Similar considerations can take place for future-type contracts related to crypto-assets/cryptocurrencies.

Most websites of abusive traders offer (or claim to offer) CFD trading services underlying, among other things, cryptocurrencies (as well as fiat currencies). These sites, intercepted in the supervisory activity of Consob, become the subject of law enforcement measures pursuant to art. 7-octies of the TUF which orders to put an end to the abusive provision of activities that qualify as investment services on financial instruments. In addition, the power to order internet connection service providers to block the websites through which the activities are carried out is exercised. As far as abusive offers of financial products are concerned, on the other hand, "atypical" financial investment proposals are increasingly frequent, including those relating to self-styled crypto-assets, which promise amazing off-market returns.

From this point of view, the offers concerning the so-called digital tokens (crypto assets) issued in the context of so-called Initial Coin offering (ICO) transactions have become increasingly important. In such cases, tokens are offered, allegedly issued through DLT technologies, and denominated in cryptocurrency, which incorporate rights to receive periodic returns.

Tokens with these characteristics can be qualified as investments of a financial nature based on the domestic notion of financial product (therefore financial products other than financial instruments covered by the Community discipline); The offer of the same therefore requires the publication of the prospectus (resulting, obviously, abusive in the absence of a prospectus). To counter these operations, CONSOB exercises the power to suspend and prohibit abusive offers of financial products as well as the advertising activity of such offers and the power of obscuration. In most cases – both of abusive intermediation and of abusive offer to the public and related advertising activity – the operations of the subjects who illegally provide confidential financial activities conceal real scams that Consob reports to the judicial authority[70].

In a nutshell, the regulatory references regarding Consob's powers in terms of financial abuse are outlined:

  • Law no. 216 of 7 June 1974 "Conversion into law, with amendments, of Decree-Law no. 95 of 8 April 1974, containing provisions relating to the securities market and the tax treatment of shares" and subsequent amendments and additions;
  • By Legislative Decree no. 58 of 24 February 1998 ("TUF") and subsequent amendments and additions;
  • From Law no. 58 of 28 June 2019 "Growth Decree".

As we mentioned, the provision of investment activities and services is reservedfor authorized persons referred to in art. 18, paragraph 1, of the TUF, pursuant to which "The professional exercise towards the public of investment services and activities is reserved for investment firms, EU investment firms, Italian banks, EU banks and third-country companies ". The provision of investment services by persons other than those listed above should be considered abusive, as it is contrary to the industry rules governing the provision of investment services. This case integrates, among other things, the offense provided for by art. 166 TUF (Legislative Decree 58/98). This article, framed in Title I "Criminal sanctions" provides for imprisonment from one to eight years and a fine from four thousand euros to ten thousand euros. According to the provisions of art. 7-octies, lett. b) of the TUF - entitled "Powers to combat abusiveness" - CONSOB "may against anyone who offers or carries out investment services or activities through the Internet without being authorized to do so pursuant to this decree: [...] (b) order the infringement to cease."[71] CONSOB also avails itself of the powers deriving from the "growth decree" (law no. 58 of 28 June 2019, article 36, paragraph 2-terdecies), according to which Consob can order internet connectivity service providers  to  inhibit access from Italy to websites  through which financial services are offered without due authorization. Art. 36, co. 2-terdecies, L. 28 June 2019, n. 58 establishes that "CONSOB orders internet connectivity providers or operators of other telematic or telecommunications networks, or operators who provide telematic or telecommunications services in relation to them, the removal of the initiatives of anyone in the territory of the Republic, through telematic or telecommunications networks, offers or performs investment services or activities without being authorized to do so. The recipients of orders communicated pursuant to the first sentence shall be obliged to inhibit the use of the networks for which they are operators or in relation to which they provide services".

From 8 March 2016 the violation of art. 18 of the TUF is no longer administratively punishable.  Art. 190, paragraph 1, of the TUF was amended by art. 5 of Legislative Decree. n. 72 of 12/05/2015, eliminating the sanction for the violation of art. 18, paragraph 1, of the TUF itself. Art. 6, paragraph 2, of the same d.lgs. n. 72 provided that "The amendments made to Part V of Legislative Decree no. 58 of 24 February 1998 apply to violations committed after the entry into force of the provisions adopted by CONSOB and the Bank of Italy according to their respective competences pursuant to art. 196-bis of Legislative Decree no. 58 of 24 February 1998. Violations committed before the date of entry into force of the provisions adopted by CONSOB and the Bank of Italy continue to be subject to the provisions of Part V of Legislative Decree no. 58 of 24 February 1998 in force before the date of entry into force of this legislative decree". The implementing provisions were adopted by Consob Resolution no. 19521 of 24 February 2016, which entered into force on 8 March 2016.

According to the definition provided by art. 1, paragraph 1, letter t) of Legislative Decree no. 58/1998, "offer to the public of financial products" must be understood as "any communication addressed to persons, in any form and by any means, which presents sufficient information on the conditions of the offer and the financial products offered so as to enable an investor to decide to purchase or subscribe to such financial products,  including placement through qualified persons".

According to art. 94-bis, paragraph 1, of Legislative Decree no. 58/98, "Those who intend to make an offer to the public of financial products other than securities and units or shares of open UCIs publish a prospectus in advance. To this end, they submit the application for approval of the same to Consob, attaching the draft. The prospectus cannot be published until it is approved by Consob [...]". Then, according to art. 99, paragraph 1, letter b) of the TUF, CONSOB may  "suspend as a precautionary measure, for a period not exceeding ninety days, the offer concerning financial products other than those referred to in letter a) [or securities], in the event of a well-founded suspicion of violation of the provisions of this Chapter" [governing the public offer of financial products] or its implementing rules [...]. According to art. 99, paragraph 1, letter c) of the TUF, CONSOB may "prohibit the offer in the event of a proven violation or well-founded suspicion that the provisions of this Chapter or of the related implementing rules could be violated"[72]. As for the second aspect, the one related to the problems related to the advertising that accompanies the offer and placement of crypto assets, it should be noted that the primary reference is to two distinct disciplines that relate the first to the competence of Consob and the second that refers to the so-called crypto assets.  "Misleading advertising" under the jurisdiction of the Italian Competition Authority[73].

In the Consolidated Law on Finance Legislative Decree no. 58 of 24 February 1998, Art. 6 (Regulatory powers), Art. 21 (Chapter II Conduct of services and activities and Art. 21 (General criteria) and more specifically Article101 (Advertising activity) are significant in terms of advertising. The Intermediary Regulation adopted by resolution no. 20307 of 15 February 2018, on the other hand, includes Art. 36 (General information requirements) and Art. 133 (General information requirements and pre-contractual information).  In addition, Article 162 (General Rules of Conduct) and Art. 173 (General information requirements and conditions for correct, clear and non-misleading information) are more properly related to the requirements and procedures for fulfilling the information obligations of independent financial advisors and financial advisory firms in the provision of the service. Finally, it is necessary to refer to the Issuers' Regulation adopted by resolution no. 11971 of 14 May 1999and to art.  34-octies (General criteria for carrying out advertising activities) referred to in Section III - Advertising activities. The regulation of misleading advertising is instead designed by Legislative Decree 2 August 2007, n. 145 implementing Article 14 of Directive 2005/29 / EC amending Directive 84/450 / EEC on misleading advertising (Official Gazette no. 207 of 6-9-2007), with the aim "to protect professionals from misleading advertising and its unfair consequences, as well as to establish the conditions of lawfulness of comparative advertising".  In it, among other things, the principle is enshrined that "Advertising must be obvious, truthful and correct".


8.3 The different types of crypto assets currently in circulation. crypto-currencies and stablecoins.

The classification of crypto assets is divided, as seen, into three main categories: cryptocurrencies or so-called payment tokens, utility tokens and investment tokens. To the categories just declined it is possible to add a further one, that of the so-called hybrid tokens, a category within which crypto assets that possess characteristics attributable to at least more than one of the categories described above fall. Cryptocurrencies perform the function of a medium of exchange only by the express will of the parties to a transaction. Furthermore, it is recalled that cryptocurrencies constitute, from a "historical" point of view, the archetype of all crypto-assets: to this category belongs, in fact, Bitcoin, the first and, even today, perhaps, most famous crypto-asset in circulation.  As is known, the technological concepts on which the functioning of Bitcoin is based have been, in fact, substantially implemented - in an original way - in every cryptocurrency system existing today.

These characteristics include: - the provision of non-inflationary mechanisms within the protocol that governs the DLT of reference (mechanisms that, that is, regulate the number and criteria of distribution to the public of a given cryptocurrency); - the presence of mechanisms aimed at avoiding so-called double spending (systems that, that is, guarantee the impossibility of duplicating existing assets); - the presence of a decentralized structure and, therefore, the absence of intermediaries (a mechanism that should reduce the costs associated with the single transaction carried out under the Bitcoin protocol and which should make it possible to transfer, through cryptocurrencies, large sums of money "paying" negligible transaction costs). 

The characteristics have meant that the market has shown a particular interest, at least at an early stage, in cryptocurrencies. At the same time, however, there are those who doubt that cryptocurrencies can supplant the traditional currency: among the many, the main obstacle usually indicated concerns the excessive volatility that characterizes the most famous and used cryptocurrencies. In order to stem the problem related to the extreme volatility of cryptocurrencies, the market has introduced the so-called stablecoins: a class, that is, of crypto-assets whose value is bound through guarantees on physical assets, such as fiat currencies (euro, US dollar, etc.), assets and precious metals (gold, diamonds, etc.), or through special algorithms that regulate the quantity offered. In fact, there are different types of stablecoins on the market.

Their classification can be carried out about the specific type of collateral used to ensure that the token maintains a value aligned with that of the reference asset. At present, and according to the most commonly adopted classifications, it is therefore possible to identify the stablecoins that use fiat collateralized currency as collateral;  Stablecoins that use other crypto-collateralized assets as collateral;   Stablecoins that do not provide for the deposit of any collateral but that keep their value stable exclusively on the basis of specific algorithms able to regulate the amount in circulation (non-collateralized or algorithmic).

In fiat collateralized stablecoins, new tokens are expected to be issued based on an equal collateralization ratio with the legal tender currency to whose value said assets are anchored. The reference currency is, in fact, simultaneously subtracted from circulation. It has been said that the companies issuing the stablecoins undertake to tie the correct amount of fiat money with respect to the equivalent value of the issued tablecoins. This implies that token holders must bear an actual counterparty risk: more clearly, in the absence of pervasive and strict transparency obligations, issuing companies could well issue tokens for a countervalue higher than that of the fiat currency constrained, thus making it impossible for stablecoin holders to reverse convert stablecoins into fiat money.

Moreover, this technological solution provides a strong component of trust that token subscribers place in issuing companies. From a conceptual point of view, such a trust mechanism is ill-suited to the motivations, so to speak, "founders" of the entire system of crypto assets which, at least in the initial intentions, aimed to be a decentralized and basically trustless system. The most popular stablecoins of the type now exposed are Tether USD (USDT), USD Coin (USDC) and Binance USD (BUSD). All these stablecoins are pegged to the US dollar.

A different solution is to proceed with the issuance of stablecoins based on a predefined collateralization ratio with one or more crypto assets, in compliance with the conditions defined by some smart contracts. This solution has the advantage of offering absolute transparency and not requiring the presence of a central entity that undertakes to bind a certain amount of legal tender currency, being able to rely on the immutability of the reference smart contract. At the same time, however, token holders are inevitably exposed to the risk of fluctuation in the value of crypto assets used as collateral. This requires the provision of more conservative collateralization relationships to protect holders and make possible the reverse process of exchange with the crypto assets initially bound. The most relevant safe case is that of the decentralized finance protocol Maker DAO which, starting from 2017, allows the issuance of DAI tokens pegged to the value of the US dollar against the opening of a collateralized debt position that provides for the deposit, as collateral, of various crypto assets, including Ether.

A further solution that has been proposed on the market is to keep the value of a cryptocurrency fixed without providing for the allocation of collateral but using an algorithm capable of regulating the amount of cryptocurrency in circulation. In particular, the algorithm generates new tokens as the demand for them increases and burns them in the event of a reduction in the demand for assets. The technological solution in question presents, like the previous ones, pro and contra. Usually, among the aspects in favor is the mechanism of regulation of the amount of cryptocurrency in circulation which, it is said, is the one that most closely follows the functioning of central bank policies.

The further positive aspect inherent in this mechanism is related to transparency, that is, to the fact that the algorithm that regulates the amount of stablecoins is public and codified within a smart contract. At the same time, however, it is impossible not to note that token holders’ risk passively undergoing a change in the number of tokens present in a wallet due to the regulation made by the algorithm. It has been said that, by decreasing the demand for tokens, the algorithm provides to "burn" a certain amount of those in circulation: it is evident that, in the event of a collapse in demand, lacking the possibility of using the collateral collected to buy back tokens on the market, token holders would not be able to convert stablecoins into traditional fiat currency.  and would therefore be exposed to the risk of large losses. Today the most widespread token on the market belonging to the category of stablecoins in question is considered AMPL, stablecoin of the Ampleforth protocol. The price of AMPL is maintained equal to $ 1 thanks to daily adjustments, called "rebases", which cause a change in the balance of the tokens present in the wallets of the subjects who hold them.

From a regulatory point of view, it should be noted that, at European level, to prepare a specific discipline for stablecoins, the proposed MiCA Regulation ("Market in Crypto-Assets", falling within the scope of the so-called "Digital Finance Package" of the European Commission) provides for the introduction of two categories to which a partially different legal regime corresponds. Crypto-assets that aim to maintain value stability by anchoring themselves to a single legal tender currency (e-money token) have been distinguished from crypto-assets that aim to keep their value stable by anchoring themselves to multiple legal tender currencies, one or more commodities, one or more crypto assets or a combination of such assets (asset-referenced tokens).

The first crypto assets (e-money tokens) would constitute a form of electronic money issued on DLT, as such subject to compliance with the general discipline for electronic currencies to which would be added the provisions of the MiCA Regulation. The other crypto-assets (asset-referenced tokens), on the other hand, would not be considered electronic money, but regulated exclusively by the MiCA Regulation, according to less stringent requirements. This type of crypto asset, while maintaining a possible financial investment function due to the heterogeneous composition of the underlying assets, lends itself in any case to being used as a payment instrument or store of value.


9. Advertising Guidelines on Crypto Assets and Investor Protection: The experience of the Spanish legal system

Over the last few years, as is known, the crypto phenomenon has found wide diffusion among the public of savers / investors and has aroused, among other things, a growing media interest that has contributed to the affirmation of the same. The crypto-asset market continues, in fact, to expand with respect to the number of users and the volume of trading and initiatives and proposals concerning cryptocurrencies are constantly growing. This trend is also confirmed by the growing role played by advertising campaigns, addressed to the indistinct audience of savers, concerning crypto-assets: more and more often, in fact, we are witnessing intense marketing campaigns, often conveyed through the web, which urge the public to "invest in crypto-currencies". In this regard, starting from the evidence that it is precisely marketing campaigns, also conducted through social networks, that direct investors towards this type of asset, the regulatory authorities, including Consob, are carrying out preparatory investigations for the adoption of investor protection initiatives since in the context of these advertising campaigns all the risks associated with the investment are often not correctly represented.

The following illustrates the Spanish experience where a discipline has recently been introduced concerning marketing communications concerning crypto assets presented as an investment opportunity.

The Royal Decree-Law 5/2021, of 12 March 2021, in constancy of pandemic emergency, has – among the various measures – introduced the new art. 240-bis in Royal Legislative Decree 4/2015 ("Law of the Securities Market") to strengthen the regulatory framework to protect investors with reference to the advertising of new forms of financial instruments and assets in the digital sphere. In particular, the decree gave the Commission National del Mercado de Valores ("CNMV") the power to subject to administrative controls the advertising of crypto-assets and other assets and products not regulated by the Law of the Securities Market that are offered/presented to the public as investment objects.

In this regard, the CNMV has been instructed to establish, through a special circular, the scope of the regulation in question, the subjects required to comply with it, the procedures and control mechanisms applicable to advertising. According to the provisions of art. 240-bis, of the Law on the Securities Market "The CNMV may make authorisation or other methods of administrative control, including the introduction of warnings on risks and characteristics, the advertising of cryptocurrencies or other assets and instruments presented as investment objects, with comparable advertising dissemination, even if they are not activities or products provided for by this Law The CNMV will develop with circular,  inter alia, the subjective and objective scope and the specific control procedures to which such advertising activities will be subject. To that end, the provisions of the second paragraph of Article 240 of this Law shall apply.' According to the provisions of art. 240(2) of the Law on the Securities Market, 'The Commissione Nazionale Mercati Mobiliari shall take appropriate action to obtain the cessation or correction of advertising contrary to the provisions referred to in the preceding paragraph or which in general must be regarded as illegal under the general legislation on advertising, without prejudice to any penalties applicable under the following chapter». With Circular 1/2022, the CNVM implemented art. 240-bis of the Law of the market of securities.

Definitions Circular 1/2022 opens with some defining provisions concerning, among other things, the definition of crypto-assets, advertising activity, advertising campaign, massive advertising campaign, advertising service providers and crypto-asset service providers. In particular, crypto-asset is defined: "the digital representation of value, right, or an asset that can be transferred and stored electronically, using a distributed ledger technology or other similar technology".[74] An advertising service provider is 'a third party that carries out a process, service or activity for or connected with another obliged entity in the context of advertising through an advertising contract, as regulated by the General Advertising Act 34/1988, of 11 November, a contract for the provision of services or an outsourcing contract. Also included are individuals who are perceived as influencers or experts in social media or audiovisual media who, through referral programs, offers or commissions of any kind, disseminate content that highlights the advantages of cryptocurrencies as an investment option. Of particular importance is the explicit inclusion of influencers, i.e., those subjects who, through social media, carry out advertising campaigns. A crypto-asset service provider is "any natural or legal person whose professional or entrepreneurial activity consists in providing one or more cryptoasset-related services to third parties". The circular defines "services related to crypto-assets" as professional or commercial activities related to crypto-assets, including the following: − trading of crypto assets on platforms, − the purchase, sale, or exchange of crypto-assets; − advice on investments in crypto-assets; − the management of crypto-asset portfolios; − any form of remuneration of crypto-assets; − any other service or activity for the distribution of crypto-assets. The circular also identifies among the possible advertising campaigns, the "massive" ones (making the rules specified below applicable to them). In particular, "massive advertising campaigns" are those that are addressed to more than 100,000 people.[75]

In this regard, the Circular establishes certain criteria to measure the potential target audience of the advertising campaign, considered from time to time, distinguishing the various advertising channels that can be used (television, radio, printed media, outdoor advertising, digital media and search engines, social media, sponsored videos). The Circular applies to advertisements concerning crypto assets that are proposed/offered to the public as an investment medium; to this end, the Circular clarifies that any advertising directed at investors or potential investors in Spain, which, implicitly or explicitly, offers or draws attention to crypto assets as a means of investment, is considered relevant advertising activity. It is assumed that a crypto-asset is offered, or attention is drawn to it as an investment medium when its purchase is promoted or any reference is made to its returns, price or value, current or future, which may suggest the opportunity to invest in such crypto-asset, even if the same may occasionally be used as a medium of exchange.

The Circular also defines some types of advertising related to crypto-assets that are excluded from its scope, including: - the advertising of crypto-assets that are financial instruments; - the advertising of crypto-assets which, due to their characteristics and nature, are not suitable for investment purposes; − advertising of crypto-assets, the sole use of which is digital access to a product or service and which is accepted only by the issuer or by a limited network of commercial providers with which the issuer has a contractual relationship, provided that there are no expectations of profit and the volume and conditions of the offer are related to the rights attributed by the crypto-assets; − the advertising of unique tokens that are not fungible with other crypto-assets, when they represent collectible assets, intellectual property works, or assets whose sole purpose is use in games and competitions, therefore not massively offered as a mere investment object; − the publication of the white paper; − generic advertising referable to a company that does not refer to a crypto-asset or to the provision of services on crypto-asset.

Furthermore, according to the provisions of theCircular, the following are required to comply with the provisions laid down therein: - providers of services on crypto-assets, who are involved in advertising activities related to crypto-assets; - advertising service providers; - any natural or legal person, other than the above, who is involved, on his own initiative, or on behalf of third parties,  in advertising activity related to crypto-assets. The Circular, in defining the control procedures exercised by the CNMV over advertising, applies the principle of proportionality. Therefore, in general, advertisements must be carried out in compliance with the requirements established by the Circular itself, but there is no prior control by the supervisory authority[76].

The Circular identifies the supervisory powers that can be exercised by the supervisory authority and establishes that the CNMV may request to terminate the advertising or to rectify it if it does not comply with the requirements set out in the Circular. To facilitate supervision by the CNMV, obliged parties are required to keep a register with relevant information and documentation relating to advertising campaigns in progress and that carried out, maintaining a "history" of two years. The regime envisaged for mass advertising campaigns is different, for which, on the other hand, prior notification is required. The notification must take place at least 10 days before the start of the advertising: after this period, advertising may take place, unless there are indications to the contrary from the CNMV. The notification must be submitted using a special template prepared by the CNMV, information must be provided not only regarding the advertisement, but also general information referring to the campaign, with a description of the crypto-asset or services offered, a description of the reference market and a list of how the advertising is intended to be disseminated.

According to the Circular, advertising must be clear, balanced, impartial and not misleading. It must be conducted in clear language, relevant information must not be omitted, and information that may cause confusion in the recipient must not be included.

To this end, specific rules are laid down on the content and methods of drafting advertisements. In the case of articles published in the media or sponsored communications, clear information must be given of this circumstance (in the case of video or audio, the warning must be given at the beginning of the advertisement). Advertising must contain the following warning "Investing in crypto assets is not regulated and may not be suitable for retail investors, the entire amount invested may be lost". In addition, indications on the risks associated with investing in crypto assets must be included directly in advertising, i.e., by reference. To this end, the Circular sets out in Annex II the relevant risks, distinguishing between product-related risks, technology risks and legal risks. Where reference is made to past performance, specific rules are established for their correct representation.


Author: Enea Franza, Director of the Department of Political Science, UniPace-UN, Rome delegation of UniPeace-N.U.


[1] The data, naturally fluctuating, refers to February 27, 2018, see https://coinmarketcap.com/charts/.

[2] The EBA was created in 2011, together with the European Securities and Markets Authority (ESMA) andd to European Insurance and Occupational Pensions Authority (EIOPA), constitutes the European system of financial supervision, the European System of Financial Supervisors (ESFS). The EBA's activity is focused on the analysis of individual credit intermediaries. CThe EBA's main tasks are twofold: promoting high-quality common banking supervision in the Union, including its uniform application in all Member States, and conducting risk analyses related to the European banking system, in order to verify its degree of robustness.à and l’adequacy of capital requirements. ESMA shall be responsible for improving investor protection and promoting stable and orderly financial markets and theEIOPA is the supervisory authority for insurance and occupational pensions.

[3] Nowadays, when banks make a transaction, i.e., when there is a transfer of ownership of money or financial assets, this is done through centralized systems, often managed by central banks. Banks keep track of their transactions in local databases; These are updated once an operation has been performed in the centralized system.

[4] It literally means "peer network" and describes a type of communication network in which each node communicates directly with the others, without the mediation of a server.

[5] The expression "consent" must be understood in its purely technical-IT sense, rather than technical-legal, since it refers to the decision-making system according to which nodes endorse individual transactions recorded within the system.

[6] Cryptography deals with the so-called "encryption techniques", i.e., the mechanisms that make use of algorithms and computer protocols capable of making a given message unintelligible/intelligible with respect to persons/users not authorized to read it

[7] The nodes are mutually synchronized so that, if one of them should be "offline" for a few hours, when the connection is restored, it will receive updates from the other nodes in the meantime intervened on the registry.

[8] Due to their characteristics, blockchains permissioned  They lend themselves to being used, mainly, by public bodies, banks and companies (among the private blockchains we remember, among others, Hyperledger, but also Rope de R3 or Quorum de JPMorgan.).

[9] A perfect use case is occurring in the healthcare industry, where blockchain is used to store data from its drug production lines. The stored data can be examined by the competent authority to check its quality, both at the level of the company itself and at the government level.

[10] The "suspended" transactions are selected to be processed (i.e., validated and placed in a block) based, among other things, on the amount of the commission associated with the transaction from time to time considered: transactions that guarantee a Fee more significant; If, on the other hand, the fees associated with a transaction were very low, the transaction could remain "unconfirmed". If, for example, Tizio sends n. 1 bitcoin to Caio, the verification of the transaction consists in ascertaining that Tizio and Caio are two nodes of the blockchain, and that Tizio is the owner of at least n. 1 bitcoin in relation to which no previous acts of devices have been registered by Tizio. The system described above – which verifies backwards in the blocks of the "chain", the existence of a transaction in favor of Tizio who attributes 1 bitcoin to him and the absence of a registration of an operation of the opposite sign – allows, among other things, to avoid the problem of the so-called double spending, that is, the risk that a user "spends" two (or more) times the same token.

[11] Mining (translation of the English "to mine" extract) has a twofold objective that of generate a new cryptocurrency (an idea we traditionally associate with the term "mining") and of verify the legitimacy of cryptocurrency transactions on the relevant Blockchain. When you complete the process of verifying a block of transactions, the miner of Bitcoin is rewarded. 

[12] With particular reference to Bitcoin which, as mentioned, uses the system Proof of Work, it should be noted that the difficulty of the mathematical problems to be solved by the miners to validate the block of transactions has become, over time, increasingly high: while in 2009 (when Bitcoin was launched), anyone, using a normal computer, could compete with others miners in solving mathematical problems and validating a block of the chain, today, due to the difficulty of solving problems, the nodes that have the computational power (called "hash rate") necessary to solve the mathematical problem are few and, moreover, often organized in aggregate systems (called "mining farms" or "mining pools", often located in countries where energy resources have a low cost): the risk is that a system Proof of Work Finical to determine a "centralization" of the transaction validation functions for a small number of users to the detriment of decentralization which, as mentioned, should instead constitute one of the main characteristics of the technologies in question.

[13]One way to escape the monetary domination in the hands of kings, of which virtual currencies represent the most recent attempt, is the emblematic one of the great medieval trading companies that Invented the system of letters of credit with which they dealt with their business. The Lyon fair, which was held in March, was used to count the give and take letters of credit of the various trading companies and bring the balance to the new year. In this way the trading companies escaped imperial control. This attempt was followed by many others. for social purposes. The aim of alternative currencies was generally to solve social problems such as unemployment on a local basis. Reference should be made to this to the ideas of Silvio Gesell, a German Argentine entrepreneur, economist, philosopher who introduced the idea that money should circulate quickly and should not be withheld. For this he invented a timed money scheme whereby money lost value if withheld. The only one of these alternative currencies that has survived in a non-marginal way is the Swiss WIR an alternative currency used in Switzerland. Initially inspired by Gesell's ideas, the WIR is now a parallel currency to the franc. Gold, for example, is certainly a store of value and a medium of exchange, but it is not a unit of account.

[14]The fundamental level is banknotes issued by central banks. In most advanced economies, banknotes make up a small fraction (generally around the 3-5%), of circulating money. Most of the money is made up of checking accounts which are numbers written into bank computers. The numbers that characterize a current account represent the purchasing power of the account holder. Money consists of numbers written into computers in the banking system. Current accounts represent the second level in the money hierarchy. In fact, current accounts are debts of the bank to the customer payable in banknotes. Formerly, Banks They were intermediaries and had to keep reserves of banknotes sufficient to ensure, under normal conditions, the convertibility of deposits into banknotes. If too many customers wanted to convert their accounts due to lack of trust (bank Run) a bank became insolvent and failed. Today, in practice, Convertibility into banknotes is required for small transactions. On the other hand, banks must always be able to transfer one customer's funds to another bank. To this end, they must have sufficient reserves. Reserves are current accounts of banks with the central bank.

[15] For fiat money, more commonly known as "legal tender" or "fiat money", means a payment instrument not covered by reserves of other materials (for example: gold reserves), and therefore without intrinsic value (even indirect). The term "fiat" means in Latin "let it be done" and indicates an order given by the government. Since ancient times, the central authority establishes what is worth as a medium of exchange, puts it into circulation and controls it. Fiat money, typically in the form of banknotes and/or coins made of non-precious metal, has value due to the fact that there is an authority – such as the state – that acts as if it had this value.

[16] For example, in the last two years the exchange rate of Bitcoin for euros has gone from 6,500 to a maximum of 56,000 and is now around 20,000. From the speculative point of view, it is very difficult to make correct predictions.

[17]  MFI Discussion Notes of January 2016: https://www.imf.org/external/pubs/ft/sdn/2016/sdn1603.pdf.

[18] The c.d. DLTs are decentralized systems based on registers (ledgers) that operate according to a distributive logic based on a new concept of trust among all participants. Registrations are not managed and validated, as was the case Traditionally, under the strict control of a central authority, but are instead created and uploaded by each participant independently. In this way each participant (who constitutes a "node" of the network) can process and control, at the same time, every single transaction, though managed autonomously must every transaction but and verified, voted and approved by the majority of participants in the network. 

[19] The Blockchain is a Ledger decentralized cryptographically based those stores assets and transactions over a network of type peer-to-peer (node to node). Different types of transactions can be supported and managed with the Blockchain: Bitcoin exchanges take place on Blockchain and more generally transactions related to the exchange of goods and services as well as the management of information related to contracts (Smart Contracts).

[20] International Monetary Fund, "Virtual Currencies and Beyond: Initial Considerations" 20 January 2016, presented at World Economic Forum in Davos Switzerland

[21] Communication of the Bank of Italy "Warning on the use of the so-called Virtual currencies" of 30 January 2015.

[22] See, ECB, 'Virtual currency schemes – a further analysis', 2015.

[23]See, in “Finance and Economics Discussion Series, Divisions of Research & Statistics and Monetary Affairs”, Federal Reserve Board, Washington, D.C., "Distributed ledger technology in payments, clearing, and settlement", 2016.

[24] https://howrnuch.net/article/bitcoin-legality-around-the-word

[25] LedgerX is a platform that is licensed for exchange, collateral and clearing services to Bitcoin holders by the US Commodity Exchange Act (CEA). It is subject to CFTC regulations.

[26]http://www.amf-france.org/en_US/Publications/Consultations-publiques/Archives?docId=workspace%3°%2F%2FSpacesStore% 2Fa2b267b3-2d94-4c24-acad-7fe3351dfc8a

[27] Reuters 19 January 2018.

[28] In 2016, the Ministry of Finance proposed to criminalize the issuance of Cryptocurrencies, but the initiative was never realized.  "Digital coin trading has become so widespread, the Russian ministry argues, that a ban on such activity would lead to conditions for the use of cryptocurrencies as a tool for illegal business, money laundering and terrorist financing.". Last year, President Vladimir Putin himself asked the government to regulate the sector.

[29] According to the Dichotomists Bitcoin energy consumption Index, the industry now uses 3.4 million U.S. households as much electricity. China is home to many of the largest miners of the world, some of which have installed hydroelectric plants in the provincesInce of Sichuan and Yunna, with an estimated national consumption equal to that of Nigeria (https://www.01net.it/bitcoin-China-banks-competition/).

[30]The Financial Stability Board (FSB), at the Bank for International Settlements in Basel, was established on the occasion of the Group of Twenty Summit (G-20) held in London in April 2009, as an evolution of the already existing Financial Stability Forum (FSF), with the aim of promoting the stability of the international financial system, improving the functioning of financial markets and reducing systemic risk, through the exchange of information and international cooperation between supervisory authorities, central banks, major supranational organizations. See the June 2017 study on FinTech, and the quarterly review of Bri of September 2017.

[31] International Organization of Securities Commissions. It is the international organisation of financial market supervisors. Its tasks are to develop cooperation among its members (135 at the end of 2001) for the improvement of market regulation and the exchange of information, to combine their efforts in setting standards and effective supervision of transactions. International in securities and to promote mutual assistance to ensure the integrity of the markets. It is divided into four Regional Standing Committees (Africa / Middle East Regional Committee, Asia-Pacific Regional Committee, European Regional Committee and Interamerican Regional Committee), has an Executive Committee with two sub-working committees (Technical Committee and Emerging Markets Committee) and a General Secretariat based in Madrid.

[32] In the United States, Future on Bitcoin have been admitted to trading on the Chicago Mercantile Exchange that on the Chicago Board Options Exchange. The volatility of these products was very high (with fluctuations of up to 30% during the same day).

[33] Think of the sudden appreciation of the value of 1 Bitcoin (from 10,000 US dollars - at the beginning of last December - up to a maximum of 19,000 US dollars reached on December 16, 2017) and the recent collapse of its price in the second half of December in conjunction with the spread of news about possible restrictions by monetary authorities of important Asian countries. There have been value changes of +1190% on an annual basis and of -30% in the last month, data that give an indication of the absence of correlation with the trend of any economic or financial indicator in the same period.  

[34] “IOSCO Board communication on concerns related to Initial Coin Offerings” (ICOs) 18 Jan 2018. The press release is available at the following address: https://www.iosco.org/news/pdf/IOSCONEWS485.pdf.

[35]   http://www.iosco.org/publications/?subsection=ico-statements

[36] The Financial Stability Board (FSB), established in 1999, brings together representatives of governments, central banks and national authorities for the supervision of financial institutions and markets, international financial institutions, international associations of regulators and supervisors and committees of central bank experts. The Financial Stability In particular, the Board aims to promote financial stability at international level in all its aspects, improve the functioning of markets and reduce risk through the constant exchange of information and international cooperation between supervisors.

[37] EBA, "Virtual currency Scheme" October 2012 (inhttp://www.ecb.europa.eu/pub/pdf/other/virtualcurrencyschemes201210 en.pdf). See point 1.1 Preliminary remarks and Motivation.

[38] "Notice to consumers on virtual currencies" of 12 December 2013 (in http://www.eba.europa.eu/documents/10180/598420/EBA_2013_01030000_IT_TRA...)

[39] A Mo example, the failure of the platform Youbit, which stated that it lost 17% of its assets in the last attack on December 19, 2017, and that for this reason, it decided to close all trades, suspend deposits and withdrawals, and begin bankruptcy proceedings.

[40] With the "wallet" (in English "Wallet") means a cryptocurrency account, which does not require any stipulation of bank contracts or the completion of the customer due diligence procedure to be opened, because virtual currencies are not subject to the regulatory obligations to which financial institutions are bound. In addition, the procedure for opening an account Wallet It generally lasts a few minutes and varies from the level of safety established by each individual operator. It is common practice for the most trusted platforms to require double authentication verified by an email address and phone number. In this case, whenever you access the Wallet, in addition to the classic identification based on username and password, the system will send on our mobile phone an alphanumeric code that confirms the authenticity of the request and allows access to the Wallet.

[41] This has been the case, thoroughly Verified the October 3, 2013, when the US FBI conducted a police operation against the e-commerce site Silk Road, then closed, where Bitcoins had been chosen as the financial solution to buy and sell narcotic products anonymously.

[42] For example, in Italy, cryptocurrencies are from the Revenue Agency combined with foreign currencies (ris. 72E/2016), so we can hold to use them, and not just to make money, and they are subject to taxation only exceeded a certain threshold. The intent of the tax legislator is, evidently, to hit the speculative intent, taken for granted in the field of traditional finance. In Europe, however, the judgment C-264/2015 CGEU assimilates cryptocurrencies to means of payment and excludes that they can be understood as foreign currencies (position shared by the ECB).

[43] cf. EBA Opinion on Virtual Currencies of 4 July 2014http://www.eba.europa.eu/documents/10180/657547/EBA-Op-2014-08+Opinion+on+Virtual+Currencies.pdf

[44] V. https://www.esma.europa.eu/sites/default/files/library/esma50-157-828_ico_statement_firms.pdf

[45]  V. https://www.esma.europa.eu/sites/default/files/library/esma50-157-829_ico_statement_investors.pdf

[46] La blockchain is also known as Distributed Ledger Technology (Dlt) literally distributed ledger technology, since the peculiar feature is the presence of multiple, all identical, copies of the transaction ledger.

[47] A token It often comes in the form of a small portable electronic device, battery powered with autonomy in the order of a few years, equipped with a screen and sometimes a numeric keyboard. Some tokens can be connected to a computer via a USB port to facilitate data exchange. A token It can also be software, where the necessary information resides directly on the user's computer, and not in an external physical object. Sometimes, the token It is necessary not so much to authenticate to the application (login) as to carry out transactions/operations or so-called provisions.

[48] Directive 2014/65/EU (MiFID II) and Regulation (EU) No 600/2014 (MiFIR). The new revision provisions of MiFID (Directive 2004/39/EC) have been published in the Official Journal of the European Union on 12 June 2014.

[49] This refers to the "Alternative Investment Fund Managers Directive 2011/61/EU".

[50] the second paragraph of Article 69 MiFID II shall indicate among the supervisory powers to be conferred on competent authorities those of:" lett. f) request the temporary prohibition of the exercise of professional activity; lett. q) issue public communications; (s) suspend the marketing or sale of financial instruments or structured deposits where the conditions laid down in Articles 40, 41 or 42 of the Regulation MiFIR are satisfied[16]; (t) suspend the marketing or sale of financial instruments or structured deposits where the investment firm has not developed or implemented an effective product approval process or has otherwise failed to comply with the provisions of Article 16(3) of MiFID II; lit.u) request the removal of a natural person from the board of directors of an investment firm or market operator".

[51]  General revision of credit authorities Section II - Supervisory Bulletin No. 1, January 2015 II.1Communication of 30 January 2015 – Virtual currencies.

[52] See Virtual Currency Warning, address: https://www.bancaditalia.it/compiti/vigilanza/avvisi-pub/avvertenza-valute-virtuali/AVVERTENZA_VALUTE_VIRTUALI.pdf

[53]The forced course is that of legal money having by law liberating power, that is, the characteristic of not being able by law to be refused for the extinction of pecuniary obligations in the State in which it is issued (articles 1277 and 1278 of the Civil Code). Both banknotes and coins can be legal tender in a state, but legal tender historically appears as a privilege granted only to banknotes to rationalize monetary circulation and marks the passage of simple fiduciary paper money to maturity.

[54] published in "CONSOB Informa" no. 5/2017 of 13 February 2017

[55] Resolution no. 19968 of 20 April 2017

[56] published in "CONSOB Informa" no. 15/2017 of 24 April 2017

[57] In particular, with regard to cryptocurrencies, with the related risks of use for illicit purposes, such as money laundering and terrorist financing, Italian legislation already provides that providers of services related to virtual currency are counted among the subjects required to fulfill customer due diligence obligations and reporting to the FIU (Financial Intelligence Unit of the Bank of Italy) of suspicious money laundering transactions and financing of terrorism. In fact, the census and the launch of the register will also serve the purpose of better monitoring compliance with the rules by operators and will give them certainty about the legal exercise of their activity.

[58] The Pseudonymization It is thus defined as "the processing of personal data in such a way that the personal data can no longer be attributed to a specific data subject without the use of additional information, provided that such additional information is kept separately and subject to technical and organisational measures designed to ensure that such personal data are not attributed to an identified or identifiable natural person." 

[59] The OAM is a body that aims to bring together professionals in this field and has the exclusive task of managing the Lists of Agents in financial activity and Mediators Credit institutions.  Established pursuant to Legislative Decree no. 141 of 13 August 2010, the OAM has legal personality under private law, in the form of a Foundation, with organizational, statutory and financial autonomy.

[60] Established in 1989 at the G7 summit in Paris, the Financial Action Task Force (Gafi) - Financial Action Task Force (Fatf) is an intergovernmental body whose purpose is to develop strategies to combat money laundering of illicit origin and, since 2001, also to prevent terrorist financing. In 2008, the mandate of the Gafi It has also been extended to countering the financing of the proliferation of weapons of mass destruction. The Gafi It develops internationally recognized standards for combating illicit financial activities, analyzes the techniques and evolution of these phenomena, evaluates and monitors national systems. It also identifies countries with strategic problems in their systems for preventing and combating money laundering and terrorist financing, so as to provide the financial sector with useful elements for their risk analysis. The Group includes 35 members representing states and regional organizations that correspond to the main international financial centers, as well as, as observers, the most important international financial organizations, and the sector (including the IMF, World Bank, Ecb, United Nations, Europol, Egmont).

[61] Then particular, for asset virtual (or "Virtual Assets") is an acronym for "Vas" and for service providers of asset virtual ("Virtual Asset Service Providers") the acronym for "VASPs".

[62] Based on a peer-to-peer system, equipped with an open and free source code, its own crypto-currency – Ether – as well as a transaction validation mechanism

[63] Domenico Dolce and Stefano Gabbana have recently designed some accessories/garments, subsequently sold at auction, and delivered to the winning bidders together with the NFT of each piece.

[64] This is the emblematic case of the NFT relating to the first tweet published in 2006 by Jack Dorsey, co-founder, and CEO of Twitter

[65] The above does not exclude that a "financial product" may still be considered to exist, sub species of "investment of a financial nature", when the NFTs are included in a negotiation scheme that provides, unlike the cases in question, specific contractual agreements suitable to financially connote the operation. The latter situation could, for example, arise if the operator of the NFT were to give the holder of the NFT an undertaking to repurchase the NFT at a higher price than that paid by the NFT holder.

[66] Italy's position was represented by the Ministry of Economy and Finance, to which Consob and the Bank of Italy provided assistance for the profiles of competence. 8 As is well known, these are meetings with technical and political profiles convened under the ordinary legislative procedure of the European Union, involving representatives of the Parliament, the Council and the Commission, in order to ensure that the European Parliament and the Council of the EU, through the mediation of the Commission, reach an agreement more quickly on the final text of the legislative act by adopting a legislative act.

[67] 1 Providers of services relating to the use of virtual currency and providers of wallet services fall within the category of "other non-financial operators" under Art. 3, paragraph 5, of Legislative Decree. n. 231/2007, subjects which, except for limited exceptions, are not supervised by sector supervisory authorities.

[68] 2 The decree was adopted in implementation of the primary regulatory provisions introduced in the national anti-money laundering legislation (Legislative Decree no. 231/2007) and in that relating to the activity of the so-called "money changers" (Legislative Decree no. 141/2010) when transposing the so-called "IV Anti-Money Laundering Directive" (EU Directive 2015/849), as amended by the so-called "V Anti-Money Laundering Directive" (EU Directive 2018/843).

[69] 3 In particular, Art. 6, co. 2, of the MEF Decree identifies the police forces required to ascertain and contest the offense; Art. 17-bis, co. 5, of the D.Lgs. n. 141 of 2010 establishes the edictal limits of the sanction ("The abusive exercise [...] is punished with an administrative sanction from 2,065 euros to 10,329 euros issued by the Ministry of Economy and Finance").

[70] 9 ICOs are a form of financing used by start-ups or by subjects wishing to carry out a specific project. To find funding is proposed to the public (normally through a cd. "White paper") a project that will be carried out through the creation of "digital tokens" through DLT technologies (see below) to be transferred, for a fee, to the subjects participating in the initiative. The ICO is therefore an event of generation through DLT of tokens that can represent different rights depending on the characteristics of the same tokens. The various steps that are usually carried out for the realization of an ICO are, therefore, the creation of a website to provide information on the operation, the drafting of a Whitepaper which describes the project to be financed, the analysis and structuring of smart contract used for the issuance and transfer of tokens, the conclusion of agreements with platforms of "Exchange" online to allow the exchange of tokens once sold/acquired.

[71] E.g., see Resolution no. 22340 of 18.5.2022 - Order, pursuant to art. 7-octies, paragraph 1, lett. b), of Legislative Decree. n. 58/1998 ("Tuf") to put an end to the violation of art. 18 of the Tuf put in place through the website https://saxo-fx24.com and related pages https://my.saxo-fx24.com and https://webtrader.saxo-fx24.com: https://www.consob.it/web/area-pubblica/bollettino/documenti/hide/interdittivi/divieto/2022/d22340.htm

[72] E.g., see Resolution no. 22192 of 2.2.2022 - Suspension, pursuant to art. 99, paragraph 1, lett. b), of Legislative Decree. No 58/1998, the public offer of investment plans by BIT Advisory Limited also through the website www.bit-advisorylimited.com  - https://www.consob.it/web/area-pubblica/bollettino/documenti/hide/cautelari/soll/2022/d22192.h TM

[73] E.g., see Resolution no. 22336 of 10.5.2022 - Prohibition, pursuant to art. 99, paragraph 1, lett. c), of Legislative Decree. No 58/1998, of the offer to the public of the investment plans carried out by Bit Advisory Limited also through the website www.bit-advisorylimited.com-https://www.consob.it/web/area-pubblica/bollettino/documenti/hide/interdittivi/divieto/ 2022 /d22 336.htm

[74] The definition seems to refer to that contained in the proposal for a Regulation At all, although it differs from it in part. The definition of MiCAR, in fact, refers only to the "digital representation of value or right" not also to the digital representation of an asset.

[75] The definition of services on crypto assets does not appear to be completely superimposable to that of MiCAR and is broader than that of the European proposal. In addition to establishing a non-exhaustive list, contrary to the provisions of the MiCAR, reference is also made to "any form of remuneration of Crypto-asset" and to "any other service or activity for the distribution of Crypto-assets".

[76] However, obliged entities are allowed to proceed with prior notification where they deem it necessary for the potential impact on the subjects to whom the advertising is addressed.



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