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Italy steps up cryptocurrency market surveillance to comply with EU MiCA regulatory framework –

Posted on by darion

Italy is stepping up cryptocurrency market supervision in line with the EU's MiCA regulatory framework

Italy is taking steps to strengthen supervision of cryptocurrency markets as part of its commitment to comply with the European Union’s regulatory framework for cryptocurrency markets (MiCA).

According to a Reuters report, these new measures aim to strengthen supervision and combat insider trading and market manipulation in digital asset markets.

According to a report published on June 20, 2024, the new decree aims to address cryptocurrency risks with stringent measures, including high fines ranging from $5,400 to $5.4 million for insider trading, market manipulation or unlawful disclosure of confidential information.

The initiative follows a European regulation established last year and designates Italy’s central bank and market watchdog, Consob, as the competent authorities responsible for overseeing cryptocurrency activities.

The primary purpose of this supervision is to protect financial stability and ensure the proper functioning of markets.

The MiCA regulation creates challenges for DeFi projects

The implementation of the MiCA regulatory framework, which was initially adopted in 2022, has created challenges for companies operating on blockchain technology and decentralized finance (DeFi) protocols.

DeFi protocols must either fully decentralize their networks or comply with anti-money laundering (AML) and Know Your Customer (KYC) regulations set out under MiCA.

While fully decentralized networks are exempt from reporting requirements under MiCA, protocols employing foundations and intermediaries to facilitate decentralized communities may not meet MiCA’s definition of sufficient decentralization.

As such, these DeFi protocols must either undergo complete decentralization or accept the need for users to provide verification data, which may pose a challenge for participants in these networks.

In line with the MiCA framework, centralized exchange Binance recently informed its European clients of the transition to a model that categorizes stablecoins as authorized or unauthorized.

While Binance has not withdrawn these stablecoins from the spot markets, their availability for certain products will be limited for European users over time.

Another platform Uphold also made changes to comply with EU regulatory changes, which resulted in the delisting of six stablecoins, including Tether (USDT), Frax Protocol (FRAX), Pax Dollar (USDP), Dai (DAI), TrueUSD (TUSD) and the Gemini dollar (GUSD).

Despite growing regulatory pressure in Europe, many experts remain optimistic about the future of stablecoins. They believe that stablecoins have the potential to alleviate the problems caused by printed fiat currencies and contribute to preventing debt crises.

The first important deadline for meeting the requirements is approaching

At the end of the month, the EU cryptocurrency industry will face a challenge first valid compliance date under a new regulatory framework approach.

On June 30, 2024, MiCA jurisdiction will include stablecoins. To issue such stablecoins in the EU, companies must have an e-money license and prove they have adequate reserves to maintain the peg.

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The implementation of MiCA is part of a broader effort to bring the cryptocurrency industry into compliance with traditional financial regulations.

Disclaimer: Crypto is a high-risk asset class. This article is for information purposes only and does not constitute investment advice. You can lose all your capital.