Italy’s Consob Consults on Regulation of Securities Token Offerings

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Italy’s securities regulator today said it held a webinar with “some major players” in the financial market to probe the regulation of securities token offerings.

Not much details were revealed about the matter, but Consob is actively working on regulations that might one day permit so-called tokenization, which allows a crypto token to represent a traditional asset like stocks.

For STO operators, the framework will entail proper regulation that cover key risks including AML and counter-terrorist financing, investor protection, governance and safe custody.

The tokenization of equities has been already highly appealing to VC firms and investment bankers in Europe and elsewhere, particularly in a friendly jurisdiction for issuing equity tokens such as Switzerland.

Although the Italian watchdog was busy on chasing unregulated crypto firms, it has yet to come up with specific regulations. Until now, Italy has sought pan-European initiatives to police crypto activities as a benchmark to begin with.

This compares to other nations, like France, which has its Pacte Law that encompasses a very broad range of measures covering many aspects of all crypto-active players.

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CONSOB has been amongst the most vigilant and strict regulators in Europe when it comes to dealing with unauthorized actors in the market. Recently, it has ordered the country’s internet access providers (ISPs) to obstruct Italian investors’ access to so many crypto-focused websites.

Italy is Gearing For a Crypto Mass Adoption

Last year, however, Italy’s top regulator published a report on crypto assets in which it proposes two new registers, one for crypto asset exchanges, and one for digital wallet service providers.

At the time, Consob was reportedly seeking to register digital asset exchanges and allow them to trade cryptoassets, provided that sufficient information is available to the public. Furthermore, there was a proposal to create a register for intermediaries who manage crypto assets on behalf of their clients.

The idea of a register for exchanges is not new as it has already existed in other European countries.

The regulator is now turning to security token offerings, which are seen as an alternative to mainstream fundraisings, as well as an evolution of unregulated initial coin offerings or ICOs. A handful of local firms have begun exploring the idea of digitizing shares of small companies, where corresponding equity tokens are issued and managed via smart contracts.

The offering typically involves a clearing and settlement platform based on the blockchain that lets companies raise capital with security tokens. It also provides secondary market ‎liquidity for tokens that are offered and sold as securities.