Crypto providers Italian registration

By way of background, the servicing of Italian clients by crypto trading providers, other providers of services relating to the use of virtual currency and digital wallet service providers (Crypto Providers) is conditional to the enrolment in a to be set up special section of the already existing OAM (Organismo Agenti e Mediatori) register (which is the general register for individuals and entities rendering financial mediation services). One of the key conditions to be eligible for being enrolled in the register in question being the having established a presence in Italy, all as explained in more details below.

Pending implementation of this special section, matter-of-factly, the servicing of Italian clients in the absence of the required registration, as of to date, has been tolerated by the Italian authorities and no enforcement actions have been taken by the Italian regulator to ban Crypto Providers, unless relevant services were deemed to have the features of MiFID services (in which case the Italian Securities and Exchange Commission – CONSOB – has been extremely active and has banned over 600 providers from continuing servicing Italian clients in the absence of a MiFID license).

Last week, a Decree of the Italian Ministry of Economy and Finance has filled in the gap, setting forth the procedure and timeline for Crypto Providers to apply for registration in the above special section of the OAM. The Decree has been published on 17 February 2022 in the Italian Official Gazette and will entry into force on the 4th of March, 2022.

The immediate next step to complete implementation is now for the existing OAM register to set up this new and separate special section for the enrolment of Crypto Providers, which the OAM is required to do within 90 days following the entry into force of the Decree. According to the OAM official press release dated 18 February 2022, this special section will be operational by 18 May 2022.

Once this separate section under the existing OAM register will have been set up, Crypto Providers who intend to provide their services (also) to Italian clients shall file an application to be enrolled therein. To be eligible to obtain such registration and on that basis permitted to service Italian clients, EU based crypto providers shall establish a branch in Italy, while non-EU crypto providers shall set up a local subsidiary.

Most importantly, Crypto Providers who at the date of the set-up of the special section of the register already provide their services, also online (typically through websites), to Italian clients, shall file an application within 60 days from launch of the relevant special section by the OAM. And again, to be eligible doing so, they shall have established by then a presence in Italy in accordance to the above.

Compliance with this deadline will allow Crypto Providers to continue servicing Italian clients also pending the registration. In the event of failure to comply with this deadline, the obligation to notify will be considered not fulfilled and any exercise of the activity by the aforementioned providers will be considered abusive. The abusive exercise of the activity is punished with an administrative sanction from € 2,065 to € 10,329 issued by the Ministry of Economy and Finance.

The application shall be filed electronically to the OAM using the relevant service in the dedicated private area of the OAM portal. Access to the dedicated area will be allowed after registration on the same portal in accordance with the technical procedures to be established by the OAM (implementing measures to follow). In more details, the application shall contain:

1. the company name;
2. the legal nature of the subject;
3. the tax code / VAT number, if assigned;
4. the registered office and, if different, the administrative office;
5. for subjects with registered office in another member state of the European Union, the address of the permanent establishment in the Italian territory;
6. the surname, name, place and date of birth, the tax code, if assigned, and the details of the identification document of the legal representative;
7. a certified e-mail address for communications between the provider and the OAM;
8. indication of the type of activity carried out as a service provider relating to the use of virtual currency and / or digital wallet service provider;
9. an indication of the type of service provided among those listed in Annex 2 of the Decree;
10. the methods of provision of the service, indication of the number and address of the physical points of operation, including any ATMs, and / or online operations with the indication of the web address through which the service is provided.

A copy of the identification document of the filing person and, in the case of a legal person, of the legal representative, as well as an updated Chamber of Commerce certificate shall be attached to the communication. Any changes in the information declared shall be communicated within 15 days from the event of change in the same information and with the same telematic methods.

The OAM, having verified the completeness and compliance with relevant requirements of the application and of its attached documentation, within 15 days of receipt of same, grants or denies the registration.

As far as the ongoing obligations applicable to duly registered Crypto Providers are concerned, these are required to:

• comply with Italian AML provisions, which entails, once registered, to adopt relevant AML procedures locally, including for KYC purposes and with a view to the reporting to local AML authorities of suspicious transactions (which will involve registration with the relevant portals maintained by the Bank of Italy) – for the sake of clarity, the registration in the special section of the OAM does not contemplate the inclusion in the application package of information as to the AML set up in place;
• transmit data relating to transactions carried out in Italy to the OAM. In particular:
  a) the customer's identification information, as reported in Annex 1 of the Decree (link above); and
  b) summary data relating to overall operations of each crypto provider for each customer, as reported in Annex 1 of the Decree (again, link above).

The transmission of such data shall take place on a quarterly basis, by the 15th day of the month following the reference quarter, according to the technical procedures to be established by the OAM (implementing measures to follow). The OAM will then keep the transmitted data for a period of 10 years.

In light of the above, Crypto Providers already active in Italy, even though cross border only, and willing to continue servicing Italian clients, should start planning the setting up of their local presence no later than the second half of March, to have it in place and, on that basis, be eligible to file the relevant application within 60 days from the set-up of the special section of the register and, by doing so, be able to continue servicing Italian clients also pending registration.