The Italian Registration for CASPs: Waiting for MiCA with a “Soft” Regulatory Approach

The article outlines the main elements of the Italian regime concerning CASP registration within the so-called “OAM register”, according to the rules enacted in 2022 and its relationship with AML/CTF compliance.

Credits @B3Rhunter

1. Introduction

The rules on crypto-asset service providers (CASPs) within the Italian legal system are divided between different statutes concerning Financial Law and anti-money laundering requirements. A comprehensive regulation has not yet been enacted, but at the beginning of 2022 new rules have provided for more clarity with respect to CASPs willing to exercise their activity in Italy. The main point of reference is the Decree of the Ministry of Economy and Finance dated January 13, 2022 (hereafter, “MEF Decree”), which has outlined the conditions and the requirements for the operations of CASPs in Italy. The new rules require CASPs to obtain a registration in the special section of the register held by the Organismo Agenti e Mediatori (OAM).

The most important players in the market are taking steps to be compliant with the new requirements. Binance announced to have obtained “regulatory approval in Italy” on May 27, 2022. On July 18, 2022, Coinbase published an announcement with the title “Coinbase secures Crypto Asset Service Provider approval in Italy”. A similar statement has been published also by Crypto.com on July 19, 2022. These big players are not alone: currently, 76 CASPs which exercise different types of activities concerning cryptocurrencies obtained the OAM registration.

The present article has the aim to point out the main features of the new rules concerning the OAM registration within the broader Italian regulatory framework.

2. The broad picture

In general terms, the activity of CASPs is treated as the one of fiat currency exchanges. Pursuant to Article 17-bis of the Legislative Decree dated August 13, 2010, no. 141 (hereafter, “Legislative Decree no. 141/2010), the professional practice of the activity of currency exchange towards the public, also seasonally, consisting in spot trading of currency, is reserved to subjects enlisted in a specific register held by OAM, according to Article 128-undecies of the Legislative Decree dated September 1, 1993, no. 385/1993. Given the latter qualification, CASPs are therefore subject to KYC/AML requirements (Article 17 Legislative Decree dated November 1, 2007, no. 231; hereafter, Legislative Decree no. 231/2007) and to the duty to report suspicious operations to the competent authorities (Articles 35–41 Legislative Decree no. 231/2007).

Moreover, as happened in the rest of Europe according to the IV and V anti-money laundering directives, CASPs are indicated among the obliged entities with respect to risk assessment duties. They should therefore take appropriate steps to identify and assess the risks of money laundering and terrorist financing (AML/CTF), taking into account risk factors including those relating to their customers, countries or geographic areas, products, services, transactions or delivery channels. The Legislative Decree no. 252/2019 has implemented the latest EU Directive on AML/CTF.

3. The OAM registration

a) Scope

The carrying out of services related to the use of crypto-assets and of digital wallets on the territory of the Italian Republic is reserved to subjects registered in the special section of the currency exchangers register kept by the OAM. The registration in the aforementioned register is subject to compliance with the requirements set by Article 17-bis, para 2, of the Legislative Decree no. 141/2010.

In order to detect the subjective scope of application, namely which CASPs have to comply with the new rules, one has to make reference to the definitions laid down in Legislative Decree no. 231/2007:

• prestatori di servizi relativi all’utilizzo di valuta virtuale (“Crypto-asset service providers”): every natural person or subject different from a natural person who provides, on a professional basis, also online, services that are functional to the use, the exchange, the storing of crypto-assets and to their conversion from or to currencies having legal tender or to digital representations of value, including those exchangeable in other crypto-assets as well as issuance, offer, transfer and clearing services and every other service that is functional to the acquisition, to the negotiation or to the brokerage in the exchange of those crypto-assets (Article 1, para 2, letter ff);
• prestatori di servizi di portafoglio digitale (digital wallet service providers): every natural person or subject different from a natural person who provides, on a professional basis, also online, services regarding the safeguard of private cryptographic keys for its clients, in order to detain, memorize and transfer crypto-assets to third parties (Article 1, para 2, letter ff-bis).

b) Requirements

Among the requirements listed by Article 17-bis, para 2, of the Legislative Decree no. 141/2010, at letter b) it is stated that legal subjects different from natural persons should have a registered and administrative office in Italy. For EU based entities, it is sufficient to have a “permanent establishment” in Italy. In practical terms, it means that crypto exchanges based in the US, Singapore or the BVI need to incorporate a company in Italy even if they want to offer online services to Italian customers. As an alternative, if they already operate in Europe through a company incorporated in one of the European Member States, they can set up a “permanent establishment” in Italy of the aforementioned company.

For the purpose of the registration, CASPs that wish to carry out their services, also online, on the territory of the Republic, are bound to undertake the communication referred to in Article 17-bis, para 8-ter, of the Legislative Decree no. 141/2010. The communication should be made to the OAM, that will check the application and record the crypto-exchange within the Register. The communication to the OAM amounts to an essential condition for CASPs to lawfully exercise their activities on the territory of the Italian Republic.

c) Contents of the communication

The subjects interested in the OAM registration must register in advance in the reserved personal account of the OAM portal, by using a certified e-mail address (PEC — posta elettronica certificata) and following the instructions contained in the operational guide, published on the OAM website.

Article 3 of the OAM circolare no. 41/22 describes the procedure that interested subjects need to follow. For the purpose of the registration in the Register, the interested subject should electronically communicate a set of data, by using the service provided for in the OAM web portal. Inter alia, the CASPs have to declare: the company name; the legal status of the entity; the tax identification code and VAT code; the registered office and, if different from the registered office, the administrative office.

Moreover CASPs have to indicate which type of activity they want to exercise in Italy. These are the types of activities indicated within an Annex of the MEF Decree:

• services that are functional to the use, the exchange, the storing of virtual currency and to their conversion from or to currencies having legal tender or to digital representations of value, including those exchangeable in other virtual currencies;
• issuance and offer of virtual currencies;
• transfer and settlement of virtual currencies;
• services that are functional to the use, the acquisition, negotiation or intermediation in the exchange of virtual currencies (e.g. execution, reception, transmission of orders concerning virtual currencies on behalf of third parties, services for placement of virtual currencies or consultancy services on virtual currencies);
• digital wallet services.

A copy of the payment of the government tax of Euro 168 (one hundred sixty-eight), according to the Decree of the President of the Republic (D.P.R.) no. 641/1972, has also to be attached to the abovementioned communication.

d) The procedure

No later than 15 days from the receipt of the communication, the OAM, after verification of the compliance and completeness of the communication and the attached documents, provides for or denies the registration in the special section of the Register. The deadline can be suspended just one time, for a time no longer than 10 days, if the OAM considers the communication to be incomplete or believes it necessary to supplement the documents foreseen in support of the communication. In this case, the OAM gives the concerned person timely communication by certified e-mail (PEC) to provide, by the same means of transmission of the communication, the requested supplement no later than 10 days after the receipt of the aforementioned notice. After this deadline, if the concerned person fails to supply, the communication is considered not to be received and the OAM denies registration. Failure to register does not invalidate the right of the concerned person to submit a new subsequent communication for the purpose of the OAM registration.

4. Information duties on operations carried out by clients on Italian territory

Once the CASP is duly registered, it must comply with information duties concerning the operations carried out by the Italian customers. Pursuant to Article 5 of the MEF Decree, CASPs must electronically submit the information relating to the operations undertaken by their clients on the territory of the Italian Republic to the OAM. In particular, subjects registered in the OAM Register, shall submit, for every client, the relevant identification data and summary data concerning the operations undertaken in every quarter. The responsibility regarding the content of the submitted information concerning the clients pertains exclusively to the registered CASPs.

For every single customer, the information concerns:

• the balance of the legal and of the virtual currencies as of the date of the last day of the reference quarter;
• the number and overall euro equivalent value of the conversion operations from legal currency to virtual and from virtual to legal, on the date of the last day of the reference quarter;
• the number of conversion operations between virtual currencies referable to each client;
• the number of outgoing and ingoing virtual currency transfer operations from/to the CASP;
• the number and euro equivalent value of the amount, on the date of the last day of the reference quarter, of the transfer operations of legal currencies outgoing and ingoing from/to the CASP related to the use of virtual currency and broken down in cash and traceable instruments.

Data related to the operations carried out by clients shall be submitted every three months, during the first 15 days after the deadline of the reference quarter. For the submission of the data related to the operations, the CASPs should use a special electronic service, accessible in the dedicated personal account of the OAM’s portal. The data submitted by the providers is stored for ten years in the OAM’s information systems, which should be respectful of EU data protection rules.

5. Fees

CASPs shall pay a one-time fee — to meet the costs of implementation, development and maintenance of the system — of Euro 8,300. This fee shall be paid at the time of the submission of the abovementioned communication for the registration. In addition, the providers will be obliged to pay an annual fee, to be determined based on the operational size of their activities and on the reported number of clients.

In case of deletion from the OAM Register — also upon party’s request — OAM will not reimburse the fee. In case the registration should be denied, OAM will reimburse the amount paid, withholding a fee for the management expenses calculated in Euro 500.

6. Assessment

Although some pretentious announcements presented by CASPs in the last months might induce people to think so, the OAM registration cannot be compared with a proper licensing as the one that will be provided for in MiCA. The registration is granted to every subject who fulfills the formal requirements indicated by the MEF Decree. Nonetheless, this is what the Italian legal system currently requires to CASPs in order to lawfully exercise their activity in Italy.

Moreover, some “side-effects” of the OAM registration should not be underestimated. It is not entirely clear how the implementation of the new rules will play out in practice, but the registration seems to put a special focus on the CASP and on its customers. The CASP will be recognized “officially” as a subject which offers its services to Italian customers and thus undergo Italian AML/CTF compliance rules. As seen, the OAM registration also entails the duty to comply with extended and recurring information duties concerning the customers and their operations. In this regard, the aim of the new rules seems related to the willingness to oversee the fulfillment of taxation duties, as OAM will strictly collaborate with other Italian authorities.

In conclusion, the “soft” approach of the Italian legislator does not involve a control on the organizational measures put in place by the CASP, nor an extension of the scope of rules provided for banks or other financial intermediaries. At any rate, in Italy it constitutes the beginning of a new era in which service providers and customers dealing with crypto are subject to regulatory compliance. From an international perspective, the OAM registration will play a signaling function for CASPs aiming to penetrate the Italian/European market.

eaglelex is a Law Professor and qualified Italian attorney. He advises on regulatory matters concerning blockchain and crypto. He currently assists several CASPs seeking to obtain a registration in the OAM register.

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