Italian regulators have issued a warning to crypto service providers regarding the upcoming deadline to operate under the Markets in Crypto-Assets (MiCAR) licensing regime. The country’s 18-month grace period is ending for companies that, until recently, operated under a local registration system.
The Italian exchange authority, CONSOB, has alerted all virtual asset providers about the impending change in the regulatory framework. The year 2025 marks the final year for European crypto exchanges to transition to a MiCAR license. The process for implementing these new regulations commenced in 2023, with various grace periods granted to different countries, but most EU nations are required to adopt MiCAR by the close of 2025.
EU-based exchanges have largely undertaken significant adjustments in preparation for MiCAR. A notable shift observed among market operators has been the move from USDT to USDC, primarily because USDT lacked the approved form of bank-based reserves required under the new regulations.
Crypto Service Providers Outside MiCAR Must Cease Operations in Italy
Italian companies are now required to re-register as Crypto Asset Service Providers (CASPs), replacing their previous Virtual Asset Service Provider (VASP) licensing.
Any current, locally approved exchange operators that fail to apply for a MiCAR license by December 30 must immediately halt all operations within Italy. They are also obligated to terminate all existing contracts, return crypto assets to their customers, and cease all custodial holding and administration activities.
Generally, MiCAR licenses can take several months to be issued. However, many exchanges have proactively obtained these licenses over the past year as a strategic move to enter the European market. Exchanges have the option to initiate the application process now and can continue their operations while awaiting their new license.
Italy’s crypto adoption rate is comparable to the European average. The country has recently experienced increased usage and trading activity, partly influenced by shifts in its tax laws. Italian exchanges are subject to mandatory reporting requirements, and traders are liable for a 26% tax on crypto earnings exceeding 2,000 EUR.
EU Considers Centralized vs. Decentralized Regulation Approaches
The European Commission is reportedly considering further shifts in crypto regulations that could extend beyond the scope of MiCAR.
The European Parliament is planning to transfer more supervisory responsibilities to the European Securities and Markets Authority (ESMA). Previously, local regulators were responsible for managing the intricacies of MiCAR licensing. These licenses also enabled exchanges to establish their business in one member state and subsequently operate across the entire Euro Area.
Local governments have voiced concerns regarding the new regulations, especially after investing years in implementing MiCAR and other financial oversight requirements for crypto exchanges.
ESMA maintains a list of registered CASPs that will be permitted to continue operations after December 30. Traders can check this list to ensure their service providers are compliant and avoid potential confusion.
Italy has 151 locally registered VASPs under the Organismo Agenti e Mediatori (OAM), a list that traders can also consult to verify if these entities have also secured a MiCAR license. Prominent VASPs registered in Italy include Gate, Binance, Coinbase, Crypto.com, Gemini, MoonPay, Kraken, BitGo, Bitpanda, and Bitstamp. The majority of these have successfully obtained their new MiCAR licenses within the past year.