Hi, This is Qadir A.K, Crypto lover and Research Columnist.
It was an amazing experience writing this series and a great response from my readers. Yet another article awaits your feedback here.
Today we will know the regulations in Republica Italiana a ‘Bel Paese’ – meaning beautiful country, with my next chapter in my writing series, ‘The Cryptocurrency Breakthrough 2020 – Synopsis 12’ – Cryptocurrency Regulations in Italy.
Italy was one of the first countries to examine the cryptocurrencies and tried to streamline their activities. However, there is still no clear picture but the government’s determination in dealing with crypto and their activities can be talked about.
Italian Government and Cryptocurrency
At present, no regulations prevent Italians from owning, using, buying or selling cryptocurrencies as means of payments. The cryptocurrencies are legal tenders in Italy The Italian government has planned to bring them under their existing taxation system.
The government recognizes bitcoin as currency and the environment in Italy is crypto-friendly with approx 39 Bitcoin ATM’s and huge no of local bitcoin users. There is an increased interest among the individuals as well as the government in the implementation of blockchain in various sectors in Italy to plunge the economic growth of the country.
Recently the Italian top news agency used blockchain technology to combat the spread of fake news.
And the Italian Red Cross Society partnered with several other firms to launch a fundraising platform and accept Bitcoins as donations amid Coronavirus pandemic
Regulations on Cryptocurrencies
As said above, cryptocurrencies are legal tenders in Italy. The regulations in Italy however, are indistinct with less precision. The central bank, Banca d’Italia, with the concerns over lack of information, regulations, surveillance, and guarantees published a notice on 30 Jan 2015, mentioning the high volatility, the possibilities of illicit activities and lack of tax regulations.
Later in September 2018, Italy joined the European Blockchain Partnership. The motive of the partnership was to generate better cooperation among the member nations and to prepare for the launch of an EU-wide blockchain application for the benefit of public and private sectors. Italy also supported a Malta-Declaration to help the promotion of DLT use in the country.
Taxes on Cryptocurrencies
Although the cryptocurrencies are legal in Italy, the tax laws on them are not clear in Italy. The laws often misled the traders in believing that the Bitcoins wallets are exempted from taxes.
The reason behind the confusion was the lack of information on the Bitcoin or cryptocurrencies being treated as foreign currencies or no. The traders felt that tax laws are not implemented on bitcoins as they were not considered as foreign currency.
However, the Revenue department stepped in and classified Bitcoins as foreign currency and the earnings are subjected to be taxed. Thus, a wallet which has held assets worth more than $60,000 for more than seven days within the same year will be taxed. In Italy, the rate of taxation for gains on foreign currency trading is 26%.
Laws Implemented on Cryptocurrencies
Virtual currencies and virtual currency exchanges both come under the newly implemented directive, the EU fifth Anti-Money laundering directive. Italy and all the European member nations need to comply with the 5AMLD and implement it.
Recently on Jan 10, 2020, the European Union implemented a new law called the EU fifth Anti-Money Laundering Directive(5-AMLD) and Italy is one of the member nations expected to implement the law. According to the directive, the cryptocurrency exchanges and the wallet providers are required to identify their customers through the KYC process and also register themselves with the concerned authorities.
Series of Events
22-03-2020:- Italian Bank Banca Sella, opens a Bitcoin trading platform called Hype platform, where-in the customers can trade Bitcoin through their accounts.
02-12-2019:- Italy government with 30 Italian experts team up to develop a regulatory framework to promote blockchain technology within the country.
23-01-2019:- The Italian Senate committees of Constitutional Affairs and Public works approved an amendment called ‘Decreto semplificazioni’. The amendment defined ledger-based technology called blockchain technology for the memorialization of documents. The Italian government is yet to approve this amendment
26-06-2017:- The EU is yet to approve the modifications done under AML4 proposed by Italy on 25 May 2017. The modifications included various articles specifically for virtual currencies and also to introduce a registry for Virtual currency exchanges.
02-09-2016:- Italy’s top tax authority, Agenzia Delle Entrate, released a new update in reference to the digital currencies. It stated that purchases and sales made through bitcoin would be exempted from VAT. The document states ,
” Traditional currency intermediary activities made with virtual currencies held by market participants are exempt from VAT, as they are among the transactions related to banknotes and coins.”
02-02-2015:- The Central Bank of Italy issued a directive again stating that cryptocurrencies can be used for illegal activities. But the businesses that store and exchange fiat currency to virtual currency are not required to comply with AML/KYC requirements. However, other virtual currency-related businesses are not included.
30-01-2015:- The Central Bank of Italy issues two directives warnings about the use of virtual currency. The European Bank Authority also made its stance clear that any financial institutions should not buy or invest in any virtual currency until a formal legal framework is established.
11-07-2014:- Italian authorities issued Bitcoin warnings and also urged for regulation. In an interview, Attorney General of Rome, Luigi Ciampoli, said that Bitcoin could be used by criminals for money laundering, financing of terrorism or mafia activities.
Also, an Italian financial police authority told in an interview that without any regulation, Bitcoin would be a powerful tool for illegal activities. Both urged for strict regulation on cryptocurrency.
18-01-2014:- Italian Parliament member Sergio Boccadutri revealed an amendment to a proposed law. This amendment would define Bitcoin and initiate a process to regulate cryptocurrency. The law also proposed the Italian government to the identification of the sender whose transaction exceeds 1000 Euros
Italy is one of the beautiful places to visit and also for the cryptocurrencies as well. Cryptos being treated as legal can be used as a mode of payment. However, the government needs to work on the regulation laws and taxes more clearly and accurately.
Italy recognizes the potential of the cryptocurrencies have to encourage illegal activities and hence the government now spending more time in forming a regulatory framework, making it safer for the investors and enthusiasts.