Bank of Italy Explores Impacts of New European Directive on Blockchain

The central Bank of Italy (Bankitalia) recently addressed the topics of bitcoin, cryptocurrencies, Blockchain and distributed ledger technology (DLT), in a detailed paper, as well as investigating the impacts of the new European directive on payment services, also called Payment Services Directive 2 (PSD2).

The Paper included in the legal research notebooks of legal advice, deals with the subject in 349 pages, of which 100 are dedicated to all the profiles related to cryptocurrencies and the blockchain, from the anti-money laundering (AML) system to the tax profiles, up to entering into the payment profiles through third parties and the interference between PSD2 and cryptocurrency.

Benefits of Blockchain

The world of banking, financial and payment services has recently been affected by important changes, caused by the development of technological innovation and by regulatory evolution (in particular by the PSD2 directive, No. 2015/2366 / EU). With these interventions the boundaries of the PSD regime have extended to scenarios involving new subjects (cc.dd. Third Party Providers).

In chorus, technological innovation has introduced the blockchain, which on the one hand has enabled the universal circulation of cryptocurrencies, exchanged with peer-to-peer (P2P) reports documented on a digital register distributed among users, on the other it could render useless in perspective the use of centralized registers managed by the authorities in charge.

Always the technological innovation is due to the introduction of advanced Information Technology platforms able to use algorithms of a series of info and to enable the meeting between subjects with excess liquidity and subjects in search of financing.

The new context gives a glimpse of a process of disintermediation of the supervised operators and the appearance of situations whose security is connected only to the technological characteristics used, never impregnable: if, on the one hand, the controls on the authorized intermediaries, on the other hand, there is an increase in those substantially without control and, perhaps, almost impossible to control.

It goes without saying that to be effective, vigilance over new intermediaries and the new types of activities conducted by them should be profoundly different from that currently activated for "traditional" operators, changing instruments and intervention paradigms.

Effects of the Technological Revolution

The document also focuses on the implications of the technological revolution, focusing on the role, functions and perspectives of blockchain, a multi-purpose tool that can be used in many banking and financial services, often distorting its features.

It further examines cryptocurrencies - both in general profiles, starting with their nature, and with specific studies on the fiscal and AML aspects, on the attitude of policy makers and on supervisory models - and the effects of using technologically sophisticated tools on "traditional" banking and financial services.

And also, it attempts to identify the new and different risks deriving from the new structure of banking, financial and payment services, and to propose updated methods of assessment and containment.