Cryptocurrencies and crypto related technologies possess a lot of potential when it comes to economic developments and improvements in areas consisting of long processes and paper work. Applications of blockchain in areas such as real estate, banking, financial trading, shipping and even cannabis trade have shown significant improvements in the entire ecosystem. While cryptocurrencies may not directly be linked to criminal activities they do face a lot of back lash owing to the lack of formal framework and regulations in the crypto related areas. Governments and even banks like the People’s Bank of China have banned activities that promote crypto related practices such as Initial Coin Offerings (ICO) owing to the anonymity related issues shadowing the crypto technology. Similar events took place when multiple crypto companies were ordered to cease all crypto related operations.
On Monday, November 19, according to an official release by the Commissione Nazionale per le Società e la Borsa (CONSOB) three crypto companies were given orders to shut halt their operations and abstain until further notice. The official release stated:
Richmond Investing (www.richmondinvesting.com) – Crypton Ltd (https://cryptoforce.world) – Alessandro Brizzi (Cryptoforce Ltd) – Eagle Bit Trade (trading packages)
Pursuant to art. 7-octies, letter b) of Italian Legislative Decree no. 58/1998 (Consolidated Law on Finance – TUF), the National Commission for Companies and the Stock Exchange has ordered the following companies to cease the infringement of art. 18 of the TUF consisting of the provision of unauthorised investment services and activities to the Italian public performed by Richmond Investing via the website www.richmondinvesting.com (Resolution no. 20696 of November 14, 2018).
Of the three companies targeted by the official release the first one which is a trading platform, Richmond Investing, has allegedly violated the Consolidated Law on Finance (TUF). The fundamental law particularly governs Italian financial markets.
The company was found in violation of the law as it had failed to register as a financial intermediary in Italy.
As mentioned in the official release the Italian securities watchdog (CONSOB) has also discontinued activities by two other companies namely Crypton Ltd. And Eagle Bit Trade, and an individual Alessandro Brizzi who represented Cryptoforce Ltd. for ninety days.
The release stated that CryptoForce which is a company specializing in Proof-of-Stake (PoS) mining had promoted a cryptocurrency that was named Crypton. The report further mentioned that Alessandro Brizzi was promoting the cryptocurrency CryptoForce on the social media platform Facebook, while Eagle Bit Trade was offering purportedly unauthorized “trading packages” to Italian investors.
These actions by the Commissione Nazionale per le Società e la Borsa (CONSOB) took place during recent calls to toughen up the regulations on crypto related matters in the European Union (E.U.). On September 5 Reuters reported that a report formulated by a Belgian think tank, Bruegel, calling for unified legislation on cryptocurrencies and stringent scrutiny on their distribution to investors had been distributed to European Union (E.U.) ministers. The report urged the regulation of Initial Coin Offerings (ICOs) and cryptocurrency exchanges at the European Union platform to ensure proper management the risks associated to cryptocurrencies and Initial Coin Offerings (ICOs), and the potential of blockchain technology could be harnessed.
BaFin, German financial regulator, ordered a partial termination of activities by Finatex Limited in November, which is a crypto related firm based in U.K. The company was given orders to stop trades as its activities were not approved by the financial legislation of Germany, including the German banking Act.
Such events and practices by institutions such as CONSOB may seem as opposing cryptocurrencies but that is not the case. In March the Italian Ministry of Economics announced the formulation of a mandate that would classify the usage of cryptocurrencies in the country and list all service providers that were related to digital currencies. The Italian government does not have a formal framework to deal with crypto related businesses. However it should be noted that the Italian government had not prohibited the financial institutions from dealing with cryptocurrencies but instead had simply recommended that the institutions wait until the formal regulations were in effect.