Italy Steps Up Crypto Market Surveillance to Comply with EU MiCA Regulatory Framework –

Italy is taking steps to strengthen its oversight of cryptocurrency markets as part of its commitment to comply with the European Union’s Regulatory Framework for Crypto-Asset Markets (MiCA).

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

According to the report published on June 20, 2024, the new decree aims to address the risks associated with cryptocurrencies with strict measures, including heavy fines ranging from $5,400 to $5.4 million for insider trading, manipulation market or illegal disclosure of inside information.

The initiative aligns with European regulations established last year and designates the Italian central bank and market watchdog Consob as the competent authorities responsible for overseeing cryptocurrency activities.

The main objective of this supervision is to safeguard financial stability and ensure the orderly functioning of the markets.

MiCA regulations pose challenges to DeFi projects

The implementation of the MiCA regulatory framework, initially adopted in 2022, has presented challenges for blockchain companies and decentralized finance (DeFi) protocols.

DeFi protocols must either completely decentralize their networks or adhere to anti-money laundering (AML) and Know Your Customer (KYC) regulations outlined in the MiCA framework.

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

Therefore, these DeFi protocols must either undergo complete decentralization or accept the need for users to provide verification data, which can pose challenges for participants in these networks.

In line with the MiCA framework, centralized exchange Binance recently informed its European customers of its transition to a model that categorizes stablecoins as authorized or not.

Although Binance has not removed these stablecoins from spot markets, their availability for certain products will be limited to European users over time.

Uphold, another platform, also made adjustments to comply with the EU regulatory overhaul, resulting 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 problems related to the overprinting of fiat currencies and help prevent debt crises.

The first major compliance deadlines are approaching

At the end of the month, the cryptocurrency industry in the EU will face the first major compliance deadline as part of new approaches to the regulatory framework.

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

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The implementation of MiCA is part of a broader effort to bring the crypto industry in line with traditional financial regulations.

Warning: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose your entire capital.

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