Blockchain 2021 Comparisons

Last Updated June 17, 2021

Law and Practice


Legance – Avvocati Associati is an independent law firm with around 300 lawyers in offices in Milan, Rome, London and New York. Founded in 2007 by a group of acclaimed partners, Legance distinguishes itself in the legal market as a point of reference for both clients and institutions. Due to its strong international practice, Legance can support clients over several geographical areas, and can organise and co-ordinate multi-jurisdictional teams whenever required. The constant attention to clients, the careful evaluation of business objectives and an unconventional approach capable of anticipating legal requirements, as well as 24-hour availability have contributed to establishing Legance as a recognised leader in domestic and international markets.

European Blockchain Partnership

Italy signed the declaration creating the European Blockchain Partnership on 27 September 2018.

Following a public call for tenders, Italy’s Ministry of Economic Development selected 30 members for a high-level expert group that would draw up a national strategy for technologies based on distributed ledgers and blockchains, as part of a process encompassing a wide range of stakeholders for preparing forward-looking policies that would encourage the growth of blockchain technologies nationwide.

Law No 12 of 11 February 2019

Law No 12 of 11 February 2019 introduced definitions for “technologies based on distributed ledgers” and “smart contracts”, thereby placing the technology on a statutory footing for the first time.

The law defines “technologies based on distributed ledgers” as information technologies and protocols using a shared, distributed ledger that is capable of being accessed simultaneously and features decentralised architecture based on cryptography, so as to permit registration, validation, updating and storage of data (either in unencrypted form or protected by cryptography) that is verifiable by every participant, but incapable of alteration or amendment. A “smart contract” is defined as a computer program that operates on technologies based on distributed ledgers, execution of which automatically binds two or more parties on the basis of effects predefined by those parties. Smart contracts meet the requirement for written form by having the parties identified digitally, under a process that itself meets the requirements that the Agency for Digital Italy set out in guidelines that are to be adopted within 90 days of the entry into force of the law converting the decree into full legislation. 

Another feature of the decree is a provision that “storage of an electronic document through the use of technologies based on distributed ledgers has the legal effect of providing an electronic time stamp as described in Article 41 of Regulation (EU) 910/2014 of the European Parliament and of the Council of 23 July 2014”. This essentially means these technologies have legal effect, with electronic documents storage on distributed ledgers able to be used in evidence, potentially valuable in sectors in which it may be crucial to show that a particular action occurred at a particular time.

"Made in Italy" and the Blockchain

In 2019, the Italian Ministry for Economic Development and IBM published the study Blockchain to track Made in Italy: origin, quality, sustainability.

The Italian textile market is in good shape. Incomes are growing. According to the Ministry of Economic Development, Exports to EU countries increased by around 4% and exports to non-EU countries by 2.9%. As much as 26.1% of the European textile industry is located in Italy. Italy is the largest worldwide exporter of yarns and wool yarns, the second largest worldwide exporter of silk and the third of hosiery.

However, textiles are also heavily affected by counterfeiting. According to The Organization for Security and Co-operation in Europe (OCSE) in 2018, counterfeits of Italian brands were worth as much as EUR12.4 billion, 16.7% of which is represented by clothing and 13% by food.

Blockchain can boost the Italian textile market by developing new business models that help reduce costs, increase trust and transparency in supply chains and help fight counterfeiting.

The Ministry of Economic Development launched a pilot project in the textile market, on the tracking of goods in the textile production chain. It focused on the production chain of linen shirts. Every step in the production line, from the manufacturer to the certifying body and to end consumer, were involved. They had to confirm consistency with given standards; such standards were hardwired into smart contracts. All phases in the production process were tracked in the blockchain though smart contracts and non-fungible tokens (NFTs): from raw material and the certification thereof, to its sale to the manufacturer, the production methods, the end distribution and sale. Via the blockchain, all relevant information is readily accessible to participants in the production line, which helps them make their choices. For example, the manufacturer, having acquired all information on a given quantity of a raw material and its certification, can decide whether or not to buy and use it. The results have shown that transparency has increased along the blockchain and production costs decreased.

However, as it turned out, further work is needed with a view to strengthening the blockchain ecosystem. The current fragmentation of blockchain technologies in use – which necessitates adaptation of the blockchain across different product types and many different participants in the production line – is unhelpful. Business most interested in blockchain still tend to develop their own. It would be more appropriate, and productive, to concentrate efforts on developing a single and uniform blockchain platform.

The possibility to track all steps of the production process – and certify raw material and their qualities, origin and places of production – will allow Italian manufacturers to certify Made in Italy through the blockchain.

IP Rights and the Blockchain

Blockchain can also act as a fundamental tool to fight piracy and to favour the protection of IP rights. As mentioned above, NFTs allow digital goods to circulate alongside the physical ones. This affects all markets: B2B for raw materials, B2C for sale, C2C for secondary markets. When consumers buy goods, they also acquire an NFT certifying as to their origin. In the absence of the NFT, consumers could not as easily satisfy themselves that the product is original.

Agrifood and the Blockchain

Through NFTs and blockchain technology, products (including non-digital ones) can be properly identified and consumers can easily access all relevant information about them. Several uses for the blockchain have been reported in the agrifood sector. 

Agrifood businesses especially appreciate the transparency and traceability brought about by the blockchain; those being the main reasons why the blockchain was introduced into the production chain. Studies have shown that consumers pay increasingly greater attention to food safety, quality and sustainability; however, 75% of consumers do not trust the information provided on labels. A digital infrastructure based on blockchain would enhance the quality and reliability of information, increasing transparency and warrantying food origin and safety. 

The stance of Italian regulators towards decentralised finance (DeFi) has so far been characterised by a fragmented approach. This has led to the adoption of a cross-sectoral regulatory framework aimed at preventing financial operators from providing products and services specifically designed to “fill the gaps” between the regulated areas of the financial system.

Indeed, for example, Italy was the first European country to adopt a regulation on equity crowdfunding (Consob Regulation No 18592/2013). Albeit access is limited to entities meeting certain requirements, a distinctive element introduced by this regulation is that crowdfunding portals may also be managed by non-professional operators (gestori non professionali).

At the same time, many areas of the DeFi sector remain unregulated in Italy. This notwithstanding, in some instances supervisors have pushed for the extension to DeFi operators of existing regulations relating to well-established sectors, as has been the case with peer-to-peer lending (often framed within the payment services framework).

In Italy, the use of blockchain and distributed ledger technology (DLT) in the financial sector is marked by a state of uncertainty.

While regulatory and supervisory authorities – both at a national and a European level – clarified that the use of such technologies is not per se prohibited, they also clarified that the existing regulatory obligations and standards should nevertheless be fulfilled. This position is especially critical in light of the fact that, while theoretically financial regulation is expected to be technologically neutral, the regulatory framework is often shaped with a specific technology and specific arrangements in mind.

In light of this, the current regulatory attitude towards DLT and its potential applications (including blockchain) is likely to slow the development of a financial industry based on them. At a European level, legislative initiatives have been put forward with a view to bringing certain areas of the regulatory framework in line with the features of new technologies disrupting the financial services industry. In this respect, the Digital Finance Package proposed by the EU Commission in September 2020 is a major step forward.

At a national level, a definition of DLT has been introduced in the legal framework. Nevertheless, focusing on the financial sector, no ad-hoc regulations have so far been adopted. A number of initial steps have been taken by Italian regulators – in particular, by the Italian securities regulator, Commissione Nazionale per le Società e la Borsa (Consob) – to define a regulatory framework related to initial coin offerings and exchanges of crypto-assets.

While this initiative is likely to be overtaken by the implementation of the EU Digital Finance Package, it demonstrates that Italian regulators are eager to take into account the specific nature of DLT and blockchain-based services in the financial sector.

The Italian approach to introducing standards that ensure that virtual assets are treated fairly is primarily based on Legislative Decree 231/2007 (AML Legislative Decree), which transposed the relevant European Directives 2005/60/EC, (EU) 2015/849 and (EU) 2018/843, and of Legislative Decree 109/2007 (together with the AML Decree, collectively known as the AML Decrees). These decrees apply the same safeguards as in the financial sector, aimed at preventing the misuse of virtual assets for money laundering and terrorist financing. The AML Decrees have been recently amended by Legislative Decree 125/2019, containing some corrective measures and provisions for transposing Directive (EU) 2018/843 (Fifth Anti-Money Laundering Directive). Further amendments to the system for cash use were introduced by Decree Law 124/2019, converted with amendments into Law 157/2019.

In particular, Legislative Decree 125/2019 introduced provisions aimed at preventing money laundering related to the use of virtual currencies, consisting, inter alia, of:

  • the broadening of the definition of virtual currency, in a way which currently encompasses any financing purpose, as well as exchange purposes;
  • the inclusion of the activity of money changers in the services of conversion into other virtual currencies as well as the services of issuing, offering, transferring and clearing and any other service functionally linked to the acquisition, negotiation or intermediation in the exchange of the same currencies; and
  • the inclusion, in the scope of digital wallet services providers, of the so-called wallet providers defined as "any natural person or legal entity that provides, to third parties, on a professional basis, also online, services for the safeguarding of private cryptographic keys on behalf of its clients, in order to hold, store and transfer virtual currencies".

The Italian regulatory framework regarding the use of DLT and blockchain for the provision of services in the financial markets is still in uncharted territory. In fact, although the European Securities and Markets Authority (ESMA) clarified how these technologies, when used in the financial markets, must ensure compliance with the requirements and constraints provided for by the applicable regulatory framework – including, inter alia, Regulation (EU) 909/2014, Regulation (EU) 648/2012, Directive (EU) 2015/2366, Directive (EU) 2014/65, Regulation (EU) 600/2014 – the absence of specific legislation that provides for an unambiguous definition of this sector and its main features still represents a critical factor which contributes to uncertainty. The Italian authorities have so far justified this approach on the basis of the need to hold off any decision until the technology is fully developed.

Currently (June 2021), there has not yet been any formal decision as to which regulatory body in Italy will be in charge of regulating and supervising the use of DLT and blockchain.

The recent decision to establish a Ministry of Technological Innovation and Digital Transition, with the appointment of former Vodafone CEO, Vittorio Colao, as Minister, further proves the increased attention of the Italian government to these issues.

Concurrent roles with respect to specific aspects connected with the use of the DLT and blockchain are held by the Consob and the Bank of Italy.

In Italy, several industry associations have been established in the financial services sector. While not endowed with regulatory powers, such associations are often involved in the setting up of co-operation ventures between members. In this respect, a remarkable initiative is that of “Spunta Banca DLT”, which is a project led by the Associazione Bancaria Italiana (ABI). Spunta is a DLT and smart contract-based application which enables banks to:

  • quickly identify mismatches in interbank transactions by securely sharing common data;
  • perform checks and exchanges directly within the application; and
  • use standardised processes and communications to fix issues.

To our knowledge, there is no currently ongoing litigation regarding the blockchain in Italy. However, the digital revolution has had a profound impact upon IP litigation, and in particular litigation regarding trade secrets. 

In this field, traditional forms of evidence have been largely replaced by digital evidence that, unlike traditional forms, requires special treatment in order for its characteristics to remain unaltered and used to its full potential in legal proceedings. Digital forensics has become widespread in Italy, and is recognised as a scientific discipline for identifying, obtaining and analysing electronic evidence, and protecting it against potential alteration. It is used above all in proceedings where digital documents have to be obtained as evidence, for example under the search procedures that occur prior to trial under Article 129 of the Intellectual Property Code. Acquiring such documents for use in evidence is a completely different process from ordinary data reproduction, and represents a technological leading edge in Italy. The process entails the creation of a forensic image of a particular medium, containing a bit-by-bit copy. This means the image includes any unallocated space, which may result in the recovery of hidden or deleted files. Clearly, it is then necessary to place a timestamp upon the acquired content, or alternatively provide the hash codes for each individual electronic file in the accompanying report.

No information is available in this jurisdiction.

A regulatory sandbox was introduced in Italy by Law No 58/19, converting Law Decree No 34/19. The idea is to allow fintech companies to test new business models that aim at developing innovative services and products in the finance, lending and insurance sectors through the use of new technologies such as blockchain and artificial intelligence (AI). For this purpose, the experimentation will be characterised by:

  • a maximum duration of 18 months;
  • reduced capital requirements on the part of the members;
  • simplified requirements proportionate to the activities to be carried out;
  • reduced timescales for authorisation procedures; and
  • definition of operating perimeters.

However, in accordance with Law Decree No 34/2019, as converted, the conditions and methods to test fintech activities in Italy shall be governed by one or more regulations to be adopted by the Ministry of Economy and Finance, after consulting the Bank of Italy, Consob and the Italian insurance regulator (Istituto per la vigilanza sulle assicurazioni or IVASS). At this stage, a public consultation on the draft regulation was launched by the Ministry of Economy and Finance, but a final version of the regulation has not yet been issued . The draft regulation sets out, inter alia:

  • the activities eligible for experimentation (eg, activities subject to prior authorisation by/registration before at least one of the Italian supervisory authorities);
  • the admission requirements (eg, the activity shall be innovative in the IT domain and in the provision of services and products in the financial, credit or insurance sectors) and the contents of the relevant admission request (eg, a description of the project and the relevant proof of concept shall be included);
  • entities eligible for experimentation (eg, fintech companies).

Having said that, the final version of the regulation may set forth some changes/more detailed provisions.

Notwithstanding the recognition of cryptocurrencies in Legislative Decree No 90 of 2017, to date there is no specific legislation regarding their tax treatment in Italy. In several practice documents, the Italian Revenue Agency has assimilated the intermediation operations of virtual currencies to the intermediation operations of foreign currencies: therefore, professional traders and miners are subject to the general tax rules ordinarily applicable to those intermediaries.

Individual investors are subject to income tax on capital gains (at the ordinary rate of 26%) only when the transferred cryptocurrency is extracted from a wallet having an average deposit greater than EUR51,645.69 for at least seven consecutive days. However, the Tax Administration has required the reporting of the total amount owned in cryptocurrencies in the annual tax return.       

The Ministry of Economic Development (MISE) appointed a “task force” of 30 experts (the MISE Task Force), which drew up a proposal, submitted for public consultation on June 2020 and still in progress, aiming, inter alia, at:

  • providing a regulatory framework competitive vis-à-vis other countries;
  • increasing investments in DLT and blockchain;
  • improving the efficiency of interactions with the public administration through the adoption of the “Once-Only” principle and decentralisation;
  • encouraging European and international co-operation through the adoption of the common European infrastructure defined by the European Blockchain Systems Infrastructure (EBSI); and
  • using DLT and blockchain to promote the transition to circular economic models, in line with the 2030 Agenda for Sustainable Development.

The Italian government is working on a national strategy involving the use of DLT and blockchain, in particular, through the MISE Task Force, which includes the use of “regulatory sandboxes” which are adjustable enough to adapt to a continuously changing technological environment.

No specific provision of Italian law governs ownership rights with respect to digital assets.

Digital assets would normally be classed among intangible assets, which also include patents or copyrights.

Plainly, questions around copyright are not unfamiliar when it comes to digital content. However, the issue of where ownership lies remains very ill-defined and little regulated. For example, in Italy there has been a certain strand of litigation surrounding the distribution of photographs over social media. Given that these photographs frequently fail to indicate the photographer’s name and the year of reproduction (elements essential to the rights over simple photographs), the Italian courts have tended to interpret the relevant legislation (such as Article 90 of the Copyright Law) as meaning that it is not strictly necessary for the photographer’s name and the year of publication to appear within the image. Instead, it has been found that it is sufficient that the person wishing to use the photograph is in a position to understand, not least from other information present on the social profile, whether the photograph is still subject to copyright or not, and from whom they should be seeking authorisation. The Court of Rome, for example, has ruled that there is a presumption that, in the absence of other indications (such as the name of a third party, or an indication that the content has been shared from the page of another user), the photographer is the person to whom the particular social media profile that featured the image belongs (Judgment of 1 June 2015, No 12076).

This issue could be overcome if all digital content were associated with a certificate on a blockchain, or a non-fungible token provided assurance of ownership of the work. An NFT represents a digital certificate of authenticity that owes its dependability to a blockchain. Assets like GIF images, memes, videos, even tweets, may become unique, capable of replication but not substitution, and thus capable of being assigned and sold. Blockchain technology could thus enable a revolution in evidencing title to rights, and new ways of transferring IP rights, where these are digitalised.

The Italian Society of Authors and Publishers, SIAE, announced in March 2021 that it had reached a milestone in its project for creating an open platform based on blockchain technology that will enable copyright to be handled transparently and efficiently. Copyright interests would be represented by digital assets.

In Italy, no official categorisation of crypto-assets has been adopted by supervisory authorities. Indeed, the wide variety of forms that crypto-assets can potentially take makes it hard to categorise them, even for supervisory authorities themselves. In this respect, Italian supervisory authorities have not always mirrored the standard tripartition between utility tokens, security tokens and currency tokens – first introduced by the Swiss supervisory authority, FINMA – in their discussion papers.

The picture is further complicated by the fact that, in Italy, tokens may, depending on their nature, qualify as MiFID II financial instruments (strumenti finanziari) or as “financial products” (prodotti finanziari). In other instances, tokens may fall outside the remit of regulated financial activities. Typically, security/financial tokens tend to be caught by existing securities regulations, while utility and currency tokens do not.

However, the existence of the category of “financial products” under Italian law complicates the picture by requiring additional considerations with respect to an offer of tokens, since – even if they do not qualify as financial instruments – they could well qualify as financial products. A token can be brought under this category on the basis of a test similar to the Howey test, thereby making it subject to, inter alia, the national prospectus and public offering requirements.

The future adoption of the Markets in Crypto-assets Regulation (MiCAR) is set to establish a much clearer regulatory framework with respect to tokens. While only applicable to tokens that do not qualify as financial instruments, MiCAR will implement a relatively straightforward categorisation of tokens, each with a specific regulatory regime.

In Italy, stablecoins are not regulated per se. While papers published by regulatory authorities (most notably, by the Bank of Italy) have provided a definition of stablecoins, no specific regulatory framework has been adopted with respect to such assets.

Nevertheless, in light of their potential use in lieu of legal tender (moneta avente corso legale), the Italian AML framework has put in place specific measures aimed at preventing the use of virtual currencies as a tool for money laundering. Given that the definition of “virtual currency” provided by the main piece of legislation governing the Italian AML framework is relatively wide, stablecoins are likely to be caught by this definition and providers of services related to stablecoins – especially moneychangers (cambiavalute) – are likely to be required to comply with AML requirements.

In addition, in light of their nature, in some instances stablecoins may qualify as electronic money pursuant to the framework set forth by the Electronic Money Directive and by the Revised Payment Services Directive (PSD2). As a result, services related to such stablecoins may only be provided by duly authorised entities. In this respect, in 2019, the European Banking Authority (EBA) provided guidance aimed at clarifying when stablecoins can be treated as electronic money. The elements of evaluation indicated by EBA include, by way of example, whether the relevant tokens are electronically stored, have a monetary value, represent a claim on the issuer and are issued on receipt of funds.

The regulatory regime applicable to stablecoins is likely to be clarified by the entry into force of MiCAR. Indeed, MiCAR aims at introducing ad-hoc safeguards to address the potential risks to financial stability and orderly monetary policy that could arise from stablecoins.

For the time being there are no specific provisions governing payments made with cryptocurrencies. Indeed, the current legislative and regulatory framework on payment systems would not, in principle, apply to cryptocurrencies, given that (i) the payment systems provisions apply to payments made by means of legal tender or electronic monies; and (ii) based on the current Italian AML legislation definition, the legal concept of cryptocurrency differs from that of legal tender.

However, it is worth mentioning that, in accordance with certain provisions of the Italian Civil Code, one may argue that an original arrangement entailing the obligation to transfer currencies not having a legal price (such as cryptocurrencies) could qualify as a payment obligation. Having said that, Italian courts are still unwilling to take this view, also considering the instability of cryptocurrencies’ market value.

In Italy, no ad-hoc legislation has been adopted with respect to non-fungible tokens (NFTs).

Due to their nature, NFTs seem unlikely to qualify as financial instruments (and, most notably, as transferable securities) pursuant to the MiFID II framework. Indeed, transferable securities are defined by MiFID II as being a “class of securities”, which is unlikely to be the case with respect to NFTs given their non-fungible nature.

Nevertheless, if purchased with an investment intent, NFTs may qualify as “financial products” under the national regulatory framework. Should this be the case, as outlined in 3.2 Categorisation, their offering to the public would require the publication of a prospectus.

The future regulatory framework applicable to markets in crypto-assets is set to take into account the peculiar nature of NFTs. Indeed, Article 4 of MiCAR proposal exempts offerings of crypto-assets which are unique and not fungible with other crypto-assets from the obligation to notify and publish a white paper.

Blockchain and related distributed ledger technologies have become famous as the technology behind cryptocurrencies, but they are already finding applications in a range of industries, as different types of data can be added to a blockchain: from cryptocurrency, transaction and contractual information to data files, photos, videos and design documents.

Within the IP industries, blockchain and distributed ledger technologies may find a number of applications.

With regard to unregistered IP rights, such as copyright and unregistered designs, blockchain technology may play a very important role, as it provides firm evidence of their conception, use, qualification requirements and status.

Blockchain technology can also provide reliable, time-stamped evidence of use of IP rights, particularly with respect to (i) the actual use and frequency of use of a trade mark in trade, which would be relevant to proving first use, genuine use, and the acquired distinctiveness/secondary meaning or goodwill in a trade mark; as well as (ii) the existing prior art, which may be published for defensive reasons, in order to prevent third parties from obtaining a patent or another form of IP right.

One useful application of blockchains is smart contracts, which can assist with the sale and licensing of IP rights. A smart contract is essentially computer code that has the ability to facilitate, execute and enforce a contract by itself. The terms of the contract are pre-programmed, so that the parties can do business with a reduced administrative burden and cost. For example, in IP, this could mean licences that are self-executing upon use of a work.

Smart contracts can also be tied into micropayments for use of content. This would work by the author assigning a bitcoin address to a work, which then allows a potential user to make a small payment to the author in return for this use. This means the author can be remunerated without having to pay the high transaction costs of existing financial networks. Such a method is simpler and more transparent than many other existing means of payment for authors.

Legislative Decree No 90/2017 has introduced a definition of cryptocurrency exchange providers into the Italian legal framework. Legislative Decree No 90/2017 has also required cryptocurrency exchange providers to be enrolled in a special section of the currency exchange register held by the Italian Agents and Credit Brokers Authority (Organismo degli Agenti e Mediatori Creditizi). However, this special section is not operational yet, as the relevant regulation to be adopted by the Minister of Economy and Finance has not been issued.

In light of the above, and considering that cryptocurrency trading is to be carried out only by registered entities, it appears that cryptocurrency exchanges cannot be made in Italy (irrespectively of the relevant form of exchange) until the aforesaid special section is activated.

The attention of the Italian legislature has consistently focused on the AML issues related to the use of cryptocurrencies. In particular, the Italian Legislative Decree on AML has extended the number of entities obliged to fulfil AML requirements by including cryptocurrency exchange providers and custodian wallet providers.

In particular, these players will be required to carry out standard KYC/AML enquiries in line with the financial sector, including customer due diligence, record-keeping, and report suspicious transactions duties provided for by Italian AML Legislative Decree.

With respect to digital assets that qualify as financial instruments under the MiFID II framework, the existing rules governing markets in financial instruments are likely to apply. Indeed, as clarified by ESMA, when crypto-assets qualify as financial instruments pursuant to the MiFID II framework, the full set of EU financial rules will to apply to their issuer and to firms providing investment services in relation to them.

In light of the foregoing, should a crypto-asset qualify as a financial instrument in Italy, activities related to it would fall under the supervision of the Italian securities regulator (Consob). Conversely, activities related to digital assets not qualifying as financial instruments would not be subject to an ad-hoc supervisory regime.

In 2019, Consob published a discussion paper aimed at defining the first steps towards the adoption of an Italian regulatory framework relating to initial coin offerings (ICOs) and exchanges of crypto-assets. This paper laid down a proposal for the specific requirements applicable to platforms for the offering of newly issued crypto-assets and crypto-asset exchange systems (although the latter were intended to only be made subject to such requirements on an opt-in basis).

Nevertheless, Consob’s proposal is likely to be overtaken by the entry into force of MiCAR, which will regulate issuers and service providers of crypto-assets that do not qualify as financial instruments and establish an ad-hoc supervisory regime related to trading platforms for crypto-assets.

Under Italian law, there are no specific provisions relating to the ability of digital asset exchanges to re-hypothecate (or transfer) to third parties customers’ crypto-assets. In the absence of any such specific framework, and according to general principles of law, one cannot exclude the possibility that these activities could be lawfully performed with the prior consent of the customer, to be obtained following appropriate disclosure of pre-contractual information.

In relation to the storage of digital assets that do not qualify as financial instruments, wallet providers are not per se subject to a regulatory regime in Italy. Nevertheless, case law has brought wallet providers within the remit of ordinary civil and tort law by setting the relationship between the service provider and the users within the framework of deposit agreements.

Such a classification has been endorsed by a number of legal scholars, who built upon the reconstruction made by the case law by further detailing the civil and tort law rules applicable to wallet services providers and relating to, for example, the relevant liability regime and standard of care they shall comply with. On top of that, some scholars have envisaged that where a wallet provider enables its users to initiate payment transactions, the payment services framework set forth under the PSD2 may apply.

While wallet providers are not per se subject to a financial regulatory regime, they are required to comply with certain AML obligations under the Italian AML framework. Indeed, when providing storage and transfer services in relation to virtual currencies, wallet providers are required to comply with, inter alia, customer due diligence obligations and suspicious transaction reporting.

A key factor affecting the regulation applicable to fundraising through the creation and sale of tokens in Italy depends on the legal qualification of crypto-assets and, in particular, whether tokens qualify as financial instruments under MiFID II. EU regulation distinguishes, inter alia, between:

  • “payment tokens”, which may be used as alternative coins;
  • “utility tokens”, granting a future right on asset; and
  • “security tokens”, which, in substance, work as any other financial instrument.

Crypto-assets are also subject to regulation and specific legal restrictions when they qualify as financial instruments. In particular, security tokens are subject to, inter alia, Regulation (EU) 2017/1129 (the Prospectus Regulation), Directive (EU) 2014/65 (the MiFID II), Directive (EU) 2013/50 (the Transparency Directive), Regulation (EU) 2012/236 (Short Selling Regulation) and Regulation (EU) 2014/596 (the Market Abuse Regulation), Italian Legislative Decree No 58/1998 and Consob Regulation No 11971/1999, just like any other financial instruments.

Consob has proposed an ad hoc regulation, to be applied to ICOs of tokens, other than security tokens, that are related to an underlying entrepreneurial project (excluding, by way of example, tokens related to ownership of works of art or real estate property). Such a regulation has not yet been implemented although the consultation ended on 5 June 2019. Along the lines of this approach, a distinction could be made setting apart the offering of security tokens and ICOs of all other tokens.

Security tokens offered in an ICO are entirely governed by Italian securities laws. In a nutshell, tokens that qualify as financial instruments (ie, security tokens) are subject to the general regulation applicable to financial instruments in Italy without any specific exemption or the application of a customised set of rules or restrictions.

Initial exchange offerings (IEOs) are not regulated on a standalone basis in Italy. The same reasoning as the one used for ICOs should apply: the issuance would be subject to securities law if the tokens qualify as securities.

In this case, the focus of regulators in Italy has been more actively directed at the exchange platforms, with the aim of ensuring that using such platforms is not a means to bypass the requirements and restrictions that would ordinarily be applicable to exchanges of financial products in Italy.

Consob’s proposal is based on a double opt-in regime which results in a close link between offering platforms (for ICOs) and exchange platforms (for IEOs).

To the extent that the exchange platforms used for IEOs are based in Italy, they are subject to registration in a special register, or if the platforms are based in countries outside of Italy they are required to be subject to a regulatory and supervisory regime having characteristics that are in line with the provisions of Italian law and provided that, in relation to the exchange system itself, Consob has entered into a specific co-operation agreement with the corresponding competent foreign authority.

Trading of crypto-assets is allowed in Italy only through crypto-asset exchange systems registered in Italy or which comply with the requirements set forth in the last part of the paragraph above.

The intention to negotiate tokens, subsequent to their ICO, on an exchange platform, must be disclosed in the white paper distributed to investors. Such disclosure should cover, inter alia, (i) the platform(s) of exchanges on which the tokens will be negotiable, as well as (ii) the related agreements reached by the promoter of the ICO initiative with the managers of such platform(s).

As a condition for an IEO to be carried out on a crypto-asset exchange system registered with Consob, information must be disclosed regarding the characteristics of the tokens and the offering itself to allow investors to form their investment decisions as generally required for negotiations of financial instruments.

For the time being, there is no specific regulation applicable to investment funds/collective investment schemes that invest in cryptocurrencies. Moreover, it is debated whether they can directly invest in cryptocurrencies based on the current Italian legal framework applicable to funds, as Italian funds are allowed to invest only in certain asset classes (including, for example, financial instruments and real estate assets). The foregoing is mainly due to the fact that, as indicated in the final report on crypto-assets issued by Consob on 2 January 2020, crypto-assets do not necessarily qualify as financial instruments.

For the time being, there is no specific regulation regarding financial services related to digital assets in Italy. In particular, since investments/deals in digital assets are basically unregulated from an Italian law perspective and are typically offered by unauthorised entities, investors cannot benefit from any specific protection/transparency regime while dealing in crypto-assets.

The above issue has also been highlighted by the Bank of Italy and Consob, by way of a notice dated 28 April 2021.

Smart contracts are “contractual-style arrangements”, whereby contractual provisions are coded into computer software or protocols. They self-execute automatically when certain conditions, determined by the parties in advance, are fulfilled. 

¬The various positions regarding the validity of smart contracts may generally be summarised in the notion “code is law”.  It is the code that underlies the transactions that ensures that obligations and duties are duly performed, and also the system’s general functioning. In Law Decree No 135/2018, later Law 12/2019 (see also the news on blockchain, web-tax, digital agenda and forensic elections) the statutory definitions of "distributed ledger-based technologies" and of smart contracts were introduced, whereunder storage of a digital document through the use of distributed ledger-based technologies has the legal effect of providing electronic time validation and is admissible as evidence thereof in proceedings (pursuant to Article 41 of Regulation (EU) 910/2014). In addition, the Agency for Digital Italy (AgID) is to put in place the related technical standards within 90 days of the entry into force of Law 12/2019. 

According to general principles of Italian law, developers cannot be regarded as fiduciaries. They are only liable if they have committed a wrongful act or if the technology does not properly work.

In Italy, no ad-hoc legislation has been put in place with regard to platforms that match borrowers and lenders of digital assets. As a consequence, their regulatory status remains unclear and applicable rules and regulations shall be determined on a case-by-case basis, depending on the nature of the services provided and of the assets to which their services relate, as well as on their customer base.

This is especially relevant in light of the fact that, on the one hand, the collection of funds from the public is reserved to regulated credit institutions and, on the other hand, the mere granting of financing – even without combining such activity with the collection of deposits or other repayable funds from the public – is typically reserved to duly licensed financial intermediaries under a national licensing regime.

While limited in scope, the picture is set to be changed by the future adoption of the EU Regulation introducing a pilot regime for market infrastructures based on DLT. Indeed, one of the distinctive features of such regulation is that, aside from the recognition of multilateral trading facilities and central securities depositories based on DLT, retail investors would be given direct access to multilateral trading facilities in which the trading of DLT transferable securities would take place. 

There is no specific regulation, but the institution that can be used is the non-possessory pledge. The perfection of the security can take place without the delivery of a pledged asset to the secured creditor.

The absence of a dispossession requirement enables entrepreneurs to retain the availability of collateral that can be used in the course of the productive cycle, so that a pledge can be transferred to the final products, the price of the transfer and assets acquired by the pledgor.

As mentioned in 4.6 Wallet Providers, custodians of digital assets in Italy are not per se subject to an ad hoc regulatory framework. Nevertheless, should the relevant digital assets qualify as financial instruments pursuant to the MiFID II framework, the rules relating to safekeeping and administration of financial instruments would likely apply.

This notwithstanding, as highlighted by ESMA, the scope of supervision in relation to crypto-assets should be able to cover risks connected to the whole lifecycle of crypto-assets, including risks related to custody/safekeeping services. Thus, while – as explained in 4.6 Wallet Providers – ordinary civil law rules may apply to custody services providers in Italy, in its final report on the discussion paper relating initial offerings and crypto exchanges, Consob proposed the creation of a register in which custodial wallet providers meeting specific requirements could be enrolled on an opt-in basis.

At a European level, the landscape is set to fundamentally change as a result of the adoption of MiCAR. Indeed, custody and administration of crypto-assets will be categorised as a crypto-asset service and specific requirements will apply to the providers of that service – most notably, those set out under Article 67 of the current proposal.

At the moment, we do not see any national peculiarity in the application of data privacy laws to blockchain-based services. The general data privacy legal framework applies and, apart from some public speeches of its members or webinars hosted on the topic, the Italian Data Protection Authority has not taken a formal stance on this. General issues of compatibility between the data privacy rules and the blockchain remain relevant in Italy too, particularly the necessity to assign data privacy roles to the various blockchain participants and, above all, the difficulty of ensuring the “right to be forgotten” to a technology designed to not forget anything. In this regard the guidance provided by the French data protection authority (Commission Nationale de l'Informatique et des Libertés or CNIL) remains the most valuable attempt to resolve the potential clash between the blockchain and data privacy principles; in this regard, an example is the suggestion to hash the personal data stored in the blockchain so as to be able to render them non-intelligible when reach the end of their life cycle, as the CNIL deems it impossible to remove them from the blocks.

Please refer to 8.1 Data Privacy.

There is no regulation related to mining.

There is no regulation related to staking.

Legance – Avvocati Associati

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Law and Practice in Italy


Legance – Avvocati Associati is an independent law firm with around 300 lawyers in offices in Milan, Rome, London and New York. Founded in 2007 by a group of acclaimed partners, Legance distinguishes itself in the legal market as a point of reference for both clients and institutions. Due to its strong international practice, Legance can support clients over several geographical areas, and can organise and co-ordinate multi-jurisdictional teams whenever required. The constant attention to clients, the careful evaluation of business objectives and an unconventional approach capable of anticipating legal requirements, as well as 24-hour availability have contributed to establishing Legance as a recognised leader in domestic and international markets.