Bank of Italy to Launch Cryptocurrency Guidelines in Coming Days
The Federal Bank of Italy has issued regulatory guidelines for the local digital asset firms operating in the region. These guidelines are based on the MiCA regulatory framework which is a legislative framework focused on the digital asset sector issued by the European Union.
The governor of the Italian Federal Bank has taken a passive approach towards Bitcoin and Ethereum. Fabio Panetta claimed on 9th July that cryptocurrencies are unbacked investments.
New Regulations will Ensure Investor Protection
The governor further talked about the scope of the upcoming digital asset regulations. He stated that these regulations will bring digital assets in accordance with the MiCA laws and ensure investor protection.
He was speaking at the Banking Association. As per his remarks, MiCA legislators have categorized digital assets into two main branches namely electronic money tokens (EMTs) and asset reference tokens (ARTs).
He noted that these tokens are used as a mode of payment and to make transactions. He also retained that the Bank of Italy has determined that only EMTs have the utility of usage as a mode of payment and the ability to retain public trust.
It is important to note that the value of an EMT is associated with a backing fiat currency such as USD-based stablecoin. On the other hand, the value of an ART is attributed to one or more types of asset classes such as gold-backed tokens like PAX Gold (PAXG).
Italy’s Stance on Digital Currencies
During his speech at the Banking Association, governor Panetta noted that Bitcoin and Ethereum are unbacked tokens. He further stated that these digital assets do not have an intrinsic value and investment in them is like gambling.
He further noted that the main focus of digital asset investors is to buy low and sell high. He expressed concerns that investors may misuse digital assets as a turnaround for taxation policies. At the same time, he called for anti-money laundering laws and terror financing regulations for this sector.
One of the points in his speech was that digital assets are not suitable to cater to the three main functions of money. The first one is a mode of payment, the second is a store of value, and the third one operates as a unit of account.
The governor also noted that the total amounts of investors who have taken up unbacked positions in crypto are negligent towards low-risk exposure.
He further stated that the overall investments in digital assets can increase in the future. Italian officials were working on increasing digital asset surveillance as a way to ensure compliance with MiCA regulations.
One of the policies finalized in this aspect talks about a financial penalty of 5000 euros or $5400 that can increase up to 5 million euros or $5.4 million for the parties that are found guilty of engaging in market manipulation or participating in insider trading.
BlockInvest Debuts Tokenized Non-Performing Loans
Italian startup BlockInvest recently launched a new tokenization venture. The product is a non-performing loan (NPL) that has branched into two projects. The first project is proof-of-concept while the second one is the default tokenized mortgages.
The NPL market in Italy was valued at around 360 billion Euro in December 2015 and has reportedly decreased since that time. BlockInvest is partnering with two Milan-based firms.
The first venture is with 130 Servicing which issues digital asset-based security notes on-chain. The second firm is called Davis & Morgan and it focuses on tokenization of real estate credits with payment lapses.
According to BlockInvest management, the firm has partnered with Polygon for tokenization. Tokenization of these products is going to enable fractional purchases. The firm has also retained that the new on-chain hosted assets will bring the impact of non-performing deals to a minimal scale.
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