New rules and deadlines for the transition under MiCar from virtual asset service provider to crypto-asset service provider in Italy

A draft legislative decree approved by the Council of Ministers provides for a transitional regime for Virtual Asset Service Providers (VASPs) in the transition to Crypto-Asset Service Providers (CASPs) in application of the provisions of EU Regulation 2023/1114 (MiCAR).

The Decree

On 24 June 2024, the Italian Council of Ministers preliminarily approved the draft legislative decree to adapt the national legislation to the EU Regulation 2023/1114 on crypto-assets markets. 

The draft decree, consisting of 48 articles divided into six titles, dedicates Title VI and, in particular, Article 45 to the transitional regime, which is crucial to ensure a smooth transition of current Virtual Asset Service Providers to future Crypto-Asset Service Providers.

The transitional regime

Article 45 of the decree establishes a transitional regime that allows all current providers of services related to the use of virtual currency and digital wallets to continue to operate for a period of six months after the implementation of MiCAR and, therefore, until 30 June 2025.

More precisely, entities, legal persons, regularly registered in the special section of the OAM (Organismo Agenti e Mediatori) Register on 27 December 2024 will be able to benefit from this transitional period.

By 30 June 2025, VASPs who intend to continue to operate in Italy will have to submit an application for authorisation as CASPs, pursuant to Article 62 of MiCAR. Only those who proceed to apply for the authorisation will then be permitted to continue to operate under the VASP regime until 30 December 2025 (that is, until the shorter term in which they obtain the acceptance - or rejection - of the authorisation).

This transitional procedure is designed to ensure that market participants have sufficient time to comply with the new discipline without interrupting their activities.

The authorisation process: competent authorities

The competent authority for the issue of the authorisation is CONSOB after consultation with the Bank of Italy, unless otherwise provided for under Article 16 of the decree. The deadline for issuing the authorisation is 70 working days.

The authorisation process: key steps

One of the most important deadlines for VASPs is 30 June 2025, by which date service providers must file their application for authorisation as CASPs. If the application is filed by this deadline, the entities will be able to continue operating until the authorisation is granted or refused, and in any case no later than 30 December 2025. Therefore, they may continue to operate pending the complex authorisation process.

However, if the application is rejected, the decree provides for a maximum period of 60 days to allow for the orderly closure of relations with Italian customers. This period should allow VASPs to handle the closure of transactions in a responsible manner, protecting customers and ensuring that their crypto-assets and respective funds are properly returned.

VASPs that decide not to file for authorisation as CASPs by the deadline of 30 June 2025 will have to cease their operations in Italy by the same date.

Consequently, the deadline of 30 June 2025 represents a turning point for the entire market of virtual currency service providers in Italy.

Communication flows and updating the OAM Register

Paragraph 2 of Article 45 lays down the communication flows between the persons entered in the VASP register, the OAM and the competent national authorities. Specifically, it provides that individuals applying for authorisation as CASPs in Italy are required to simultaneously notify the OAM of this.

VASPs who file for authorisation in a Member State other than Italy will have to communicate the filing directly to CONSOB so that it in turn informs OAM.

These notifications are to be considered essential in order to maintain the registration in the special section of the OAM register. Similarly, a similar communication must be made regarding the acceptance or rejection of the application, so as to ensure that the register is correctly updated.

Customer information and transparency

Paragraph 5 of article 45 stipulates that all persons registered in the VASP register are obliged to communicate to their customers and make known via the web how they intend to conform their operations to MiCAR or, alternatively, how they will manage the orderly termination of existing relationships if they do not intend to apply for authorisation as CASP. This communication must take place as soon as the plans and measures are finalised and in any case no later than 31 May 2025.

In addition, pending the authorisation process or the termination of their operations, VASPs are required to inform their customers that their activity is subject to the discipline provided for virtual currency service providers and digital wallet service providers and not to that provided for by MiCAR. In this regard, the Bank of Italy, in a communication dated 22 July 2024, specified that the anti-money laundering rules currently applicable to VASPs will continue to apply to them until the authorisation is obtained.

Transparency is a key element of this transitional regime. Customers must be informed in a clear and timely manner about the intentions of service providers and how they intend to handle the transition to the new regulation or the respective closure of their activities. 

Data retention and accessibility obligations

Paragraph 6 provides that the obligation to transmit data flows on operations, currently provided for in article 17-bis, paragraph 3, of Legislative Decree No. 141 of 2010, will cease to apply as from the second quarter of 2025. In fact, as of 1 April 2025, this obligation will be replaced by the obligation to store the same information, for a period of 10 years, and by the obligation to make it accessible upon request by the same persons who are currently entitled to request it from the OAM.

This change aims to simplify the data management process, while maintaining the accessibility of information. Data retention ensures that all relevant information is available when needed, but without imposing an undue burden of continuous transmission of the same data.

Osborne Clarke comment

The transitional regime provided for in Article 45 of the decree represents a crucial element of the implementation of MiCAR in Italy.

In this respect, it is considered to have been structured in such a way as to ensure an orderly and clear transition, safeguarding service providers and their customers during the process.

Potentially, this scheme will affect all VASPs currently registered with the special section of the OAM (No. 144) who, at the end of March 2024, were found to be managing virtual currencies with a total value of almost €3 billion (as per the OAM's latest analysis of quarterly flows).