Cryptocurrencies, tokens and ICOs under the current Italian financial legal framework

1. Background

In three recent decisions (Resolutions no. 20693, no. 20694 of 14 November 2018 and no. 20751 of 19 December 2018), the Italian Authority responsible for regulating and supervising the Italian financial markets (Consob) maintained its watchful, punctual, though discrete, regulatory stance on the new frontiers of financial innovation (fintech), in the context of a regulatory framework that did not take into specific consideration (yet?) the matters of “cryptocurrencies” or “virtual money”. Following a review of the recent ESMA’s survey carried out with all European supervisory authorities (cf. ESMA, Advice on Initial Coin Offering and Crypto-Assets, 9 January 2019, available at the following address:, the standards of protection granted to Italian investors by our Authority appear more wide-ranging than the thresholds provided in many other European systems, by virtue of the concept of “financial product”, which entered our legislation to a broader extent than the concept of “financial instrument” adopted by the relevant European legislation.

Before any other issues, we should focus on the legal characterization of “cryptocurrencies”, in relation to its objective nature as “asset” (diversely classifiable, as the case may be, as “money” or “currency” – or seldom as a “payment method” – “financial instruments”, “securities”, “financial products”) capable of being involved in different kind of financial transactions (holding, accretion, trading, offer, lending, investment). From an additional, related standpoint, this subject ought to be investigated in view of the regime of “reserve of activity” and/or conduct of business obligations applicable to the business of the entities taking part in the above transactions, either in the “primary” market (as issuers or lenders/borrowers) or in the “secondary” market (as brokers or service providers, as applicable, for “investment”, “management”, “payment”, “collection of orders”, “placement”, etc.); which roles and/or functions are often subject to an unprecedented combination, as it is common in the new sharing economy model.

2. Cryptocurrencies as a “financial instrument”

Investment services are one of the main regulatory domains, which cryptocurrencies are frequently associated with, because of their possible classification as “financial instruments”.

Therefore, it is worth questioning whether, and to what extent, the performance of a series of legal actions or “activities” (purchase, sale, brokerage, management or consulting) with respect to the cryptocurrencies may or should be contemplated in the scope of the rules governing “investment services”. Nowadays, this issue has become particularly urgent as regards the purchase, sale or brokerage of cryptocurrencies through “digital platforms” active on the web, to which users have direct access.

Following a review of the main features of “financial instruments” under our domestic, current legislation (deriving from the EU MIFID Directives), it is apparent that “cryptocurrencies”, as such, cannot be explicitly considered by, or fall within, the legal classification in point.

Thus, it may be concluded that the trading or brokerage of “cryptocurrencies” does not breach, per se, and in general any restricted business, as these can be carried out irrespective of the MIFID rules on the conduct of business, which apply in the event that the above activities are carried out in respect of “financial instruments”. 

In any event, utmost caution is to be paid to the publicity and methods of offering of cryptocurrencies for broader “investment” purposes. In fact, compliance with strict fairness criteria must be ensured, so as to avoid committing omissive or deceitful behaviours and/or unfair trading practices or other infringements of the Italian Consumer Code (as the Italian Antitrust Authority recently pointed out with regard to the sale of diamonds through the banking system for investment purposes).

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