Italy could provide an entry point for riskier platforms to operate across Europe.
The Italian financial regulator is approving licenses for cryptocurrency exchanges without properly examining them, according to a report.
The Organismo Agenti e Mediatori (OAM), Italy’s financial agent supervisory body, registered 73 crypto firms as virtual currency service providers over the summer, having initially made it available in May.
At the time of registration, several major crypto firms including Coinbase, Binance, and Crypto.com announced that they had received regulatory approval to operate in Italy.
Although being registered theoretically means that these companies adhere to the country’s anti-money laundering regulations, none of them had been thoroughly investigated by the authority before receiving approval.
The OAM confirmed that it is still working to determine what relevant data it should collect from companies, which it probably won’t start doing until next year, meaning that Italian supervisory authorities are not currently monitoring any transactions that take place in these exchanges.
The registry does not imply that companies are actually setting up shops in Italy.
Binance, for instance, has an address in the southern Italian province of Lecce, according to the register, under the entity name Binance Italy LLC. However, the company does not have any big plans for Office.
Crypto.com and Coinbase both list the same local address in the OAM registry in the Italian city of Parma. OAM told CoinDesk that both companies have “permanent establishments” in Italy, so they comply with the registration requirements.
Registration in Italy: a “Light” Touch
Compared to other European Union countries, Italy’s registration process is “very light,” said Francesco Dagnino, managing partner of Milan-based law firm Lexia Avocati, which has handled 16 applications.
According to the lawyer, the registry does not require compliance with any special requirements, including operational integrity or anti-money laundering (AML) standards. “As far as I know, Italy is probably the jurisdiction with the simplest process. It’s just a record,” he said.
The OAM has been really busy. While regulators are commonly criticized by industry for delays in processing applications, Italy’s OAM has quickly added 73 crypto firms – including those listed above – to its new roster for virtual currency service providers, which only was opened in May.
Meanwhile, in France, Crypto.com’s recent approval process demonstrated the efforts other EU regulators go through before giving approval.
The company first had to receive authorization from the Prudential Control and Resolution Authority (ACPR), a financial regulator operating under the auspices of the Banque de France.
The Autorité des Marchés Financiers (AMF) then reviewed the application, largely focusing on anti-money laundering (AML) and preventing terrorist financing, before registering Crypto.com as a digital asset service provider. (DASP) in France.
Risks Posed by MiCA Legislation
While this certainly poses a risk to consumers using these services in Italy, under upcoming European Union regulation, it could potentially affect other constituent countries as well.
Earlier this week, it was reported that the EU Markets in Crypto Assets Bill (MiCA) was finalized and left open for comment.
If passed, this legislation would only require crypto businesses to receive regulatory approval from a national authority to operate across the EU.
Consequently, if Italy does not strengthen its regulatory standards by the time the legislation is passed, it could provide an entry point for riskier platforms to operate across Europe.
By Audy Castaneda
