Quick Answer
Yes, cryptocurrency is legal and regulated in Italy.
- New MiCAR regulations fully govern all crypto-asset activities.
- Service providers must be authorized by national authorities like Consob.
Legal Status of Crypto in Italy
Cryptocurrency in Italy is now legal and fully regulated, moving decisively out of what was previously considered a legal gray area. This clarity comes from the national implementation of the European Union's Markets in Crypto-Assets (MiCAR) framework, which establishes uniform rules for investor protection and market integrity. Under this new regime, crypto-asset service providers must be authorized and comply with regulations overseen by authorities like the Bank of Italy and Consob. The primary regulation governing these activities is the Legislative Decree No. 129, which aligns Italian law with MiCAR.
Current Regulations
Italy's regulatory framework for cryptocurrency is now defined by Legislative Decree No. 129, which aligns national law with the EU's Markets in Crypto-Assets (MiCAR) regulation. This decree, effective as of September 2024, provides a comprehensive structure for the issuance and trading of crypto-assets, including asset-referenced and e-money tokens. Under these rules, crypto-asset service providers (CASPs) must secure authorization from national authorities and comply with stringent requirements for asset segregation and consumer protection.
Regulatory Authorities
Several key authorities are responsible for the supervision and enforcement of crypto regulations in Italy.
- Consob (Commissione Nazionale per le Società e la Borsa): This authority is responsible for investor protection and the integrity of cryptocurrency markets. It grants authorization to crypto-asset service providers (CASPs) and oversees all crypto-assets except for asset-referenced and e-money tokens.
- Bank of Italy (Banca d'Italia): Focusing on financial stability, the Bank of Italy authorizes the issuance of asset-referenced tokens (ARTs) and e-money tokens (EMTs). It also holds prudential supervision powers and oversees anti-money laundering compliance for CASPs.
- Ministry of the Economy and Finance: This ministry is tasked with preventing the financial system's use for illicit activities like money laundering and terrorist financing. It is empowered to publish decrees that define the legal obligations for cryptocurrency providers.
- Agenzia delle Entrate (ADE): As Italy’s revenue agency, the ADE handles the tax treatment of cryptocurrencies. It clarifies reporting obligations and sets the rules for how profits from crypto transactions are taxed for individuals and corporations.
- Agencia per l’Italia Digitale (AID): The AID is responsible for the technical side of regulation, specifically overseeing Distributed Ledger Technology (DLT) and smart contracts. It works to promote the use of digital technology in the country.
Historical Context
Italy's crypto regulation has evolved from foundational tax rules to a comprehensive framework. The journey began with a 2016 Ministerial Resolution clarifying tax treatment. In 2017, Legislative Decree No. 90 introduced a definition for "virtual currencies" and applied anti-money laundering rules. A major policy shift occurred in September 2024 when Italy adopted the EU's MiCAR framework via Legislative Decree No. 129. This replaced a basic registration system with a full authorization regime for service providers, significantly increasing investor protection, professionalizing the market, and allowing for cross-border operations within the EU.
Compliance Requirements for Businesses in Italy
Under the new regulatory framework, crypto-asset service providers (CASPs) in Italy must adhere to a comprehensive set of compliance rules, largely mirroring those for traditional financial institutions. The Bank of Italy has outlined several mandatory procedures to ensure market integrity, financial stability, and consumer protection.
- AML/CFT Compliance: All anti-money laundering and counter-terrorist financing requirements that apply to financial intermediaries have been extended to CASPs under the Transfer of Funds Regulation (TFR) recast. This requires implementing adequate organizational and control structures, with the Bank of Italy acting as the supervisory authority.
- Know Your Customer (KYC) Procedures: As a core component of AML obligations, CASPs must implement robust KYC processes. This includes customer identification, verification, and ongoing monitoring to prevent illicit activities.
- Authorization and Supervision: Businesses must be formally authorized by the relevant national authorities—the Bank of Italy or Consob—before issuing crypto-assets or offering related services. The Bank of Italy also holds prudential supervision powers over issuers of e-money tokens (EMTs) and asset-referenced tokens (ARTs).
- Risk Management and Disclosure: Companies are required to conduct thorough risk assessments, particularly concerning the potential impact of their services on the broader payment system. They must also ensure that all potential holders are made fully aware of the risks and their rights associated with the crypto-assets.
- Regulatory Adherence: Full compliance with the Markets in Crypto-Assets (MiCAR) regulation is mandatory. While rules for EMTs and ARTs became effective on June 30, 2024, all MiCAR provisions will be fully applicable from December 30, 2024.
Why this matters for Cross-Border Payments
For businesses in India engaging in cross-border transactions with Italy, these new regulations introduce a formal, standardized framework for crypto payments. This means Indian companies must now ensure their Italian partners are fully compliant with MiCAR, adding a significant due diligence step to their operations. The primary pain point is the potential for increased friction and slower transaction times, as Italy's stringent authorization and KYC requirements can introduce delays that counteract the speed benefits often associated with cryptocurrency. This shift from a loosely regulated environment to a highly structured one requires a strategic adjustment for any firm relying on crypto for India-Italy commerce.
How Lightspark Enables Compliant Crypto-Native Payments
Lightspark offers a global payments platform, the "Money Grid," designed to make money move as instantly as information online. Its core products, Lightspark Connect and Grid Switch, provide two pathways to this network. Connect offers native access to the Bitcoin Lightning Network for fast, low-cost transactions. Grid Switch enables regulated institutions to tap into this global network using their existing domestic real-time payment systems, bypassing the need to directly handle cryptocurrency and easing cross-border friction.
For businesses navigating Italy's new MiCAR framework, Lightspark provides tools to maintain compliance without sacrificing speed. The platform facilitates regulatory adherence by offering features like audit-ready reporting and flexible key custody models. This allows regulated institutions to leverage the efficiency of the Lightning Network for instant, 24/7 cross-border settlements while operating within established legal structures, turning a potential compliance headache into a competitive advantage.
To learn more about how Lightspark can help your business navigate global payments, visit their website.
Notice: This article is provided for informational purposes only and does not constitute legal advice.
FAQs
How is cryptocurrency taxed in Italy?
In Italy, gains from cryptocurrency transactions are taxed as "other income" at a 26% rate if they exceed €2,000 within a tax year. Taxpayers are also required to declare their crypto holdings annually through a specific section of their tax return.
Can I use cryptocurrency for everyday purchases in Italy?
While it is legal, using cryptocurrency for daily retail purchases is not common in Italy, as acceptance by merchants remains limited. The current regulatory focus is primarily on financial services and investment rather than on promoting crypto as a widespread payment method for goods.
What are the penalties for non-compliance with crypto regulations in Italy?
Failure to comply with Italy's crypto regulations can lead to severe penalties, including significant administrative fines and potential criminal charges for illicit activities. These enforcement actions are designed to ensure market integrity and protect consumers under the new MiCAR framework.
Sources
- Bank of Italy. "Regulation (EU) 2023/1114 on Markets in Crypto-assets (MiCAR). Communication by the Bank of Italy." Banca d'Italia, 22 July 2024, www.bancaditalia.it/media/approfondimenti/2024/micar/index.html?com.dotmarketing.htmlpage.language=1.
- Bonolis, Paolo, and Gianfabio Florio. "Crypto-assets are now regulated in Italy Italy approves the decree to adjust local rules to MiCAR provisions. Main news in a nutshell." CMS, 3 Oct. 2024, cms.law/en/ita/publication/crypto-assets-are-now-regulated-in-italy-italy-approves-the-decree-to-adjust-local-rules-to-micar-provisions.-main-news-in-a-nutshell.
- "Italy - Cryptocurrency Laws and Regulation." Freeman Law, freemanlaw.com/cryptocurrency/italy-and-cryptocurrency/.
- KPMG. "Italy: Flat tax for crypto investors." KPMG, 1 July 2022, assets.kpmg.com/content/dam/kpmg/it/pdf/2022/07/PDF_crypto_fla_tax.pdf.
