The DLT market in Italy might soon be regulated. At a May 24th, 2023 panel discussion at Palazzo Montecitorio Organized by Fleap and animated by institutions and fintech industry players, it emerged Italy will have its own register of providers specializing in the tokenization of corporate financial instruments such as stocks, bonds, and debt securities.
The objectives of the panel organized by Fleap, Europe’s first platform for the issuance of digital assets of a financial nature and native digitization of corporate processes based on blockchain technology, were to define the limits for the establishment of a vehicle for holding financial instruments on blockchain in continuity with European Commission Regulation 858/2022, which regulates the creation and management of markets dedicated to the exchange of digital financial instruments.
“The conversion into law of DL fintech creates a regulatory bridge between the European Pilot Regime and the willingness of companies and intermediaries to take advantage of DLT technology. This innovation represents a great opportunity for firms and markets because of the multitude of potential solutions that DLT technology can offer. Using a manager, the company can issue financial products on blockchain, under the control of regulators therefore in maximum security. The goal is to create trust between the technology, the companies, and the users/subscribers of digital financial products,” said Thomas Iacchetti, CEO of Fleap.
The regulation of the DLT market, in fact, will allow greater diffusion of such operations among Italian SMEs looking for a solution that can guarantee certified transparency, automation of complex processes, cost reduction, security, and accessibility.
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What fintech operators think about the regulation of the DLT market
Introducing the proceedings was Marco Osnato, Chairman of the VI Finance Commission Chamber of Deputies, who, reiterating the value of the FinTech Decree and the potential of blockchain, in the presence of the Bank of Italy and CONSOB said, “Parliament has become the protagonist of an important innovation that will help the financial markets, protect citizens and find a tool that tomorrow can also be used by the Public Administration.”
And in fact, in recent months with the approval of the Fintech Decree, which contains urgent provisions on the issuance and circulation of financial instruments in digital form and the simplification of experimentation, the regulatory sandbox was established, a controlled environment within which the Bank of Italy, Consob, and Ivass can interact with supervised intermediaries and FinTech operators to test technologically innovative products and services for the banking, financial and insurance sectors.
The meeting was also attended by Andrea De Bortoldi, Hon. VI Finance Committee Chamber of Deputies, and Emiliano Fenu, Hon. VI Finance Committee Chamber of Deputies.
The new scenarios opened
Marco Cuchel, President of the National Association of Chartered Accountants, recalled, “With the conversion into law of DL 25/2023, a new possibility is also offered in Italy for Italian companies, especially SMEs, to access credit outside traditional channels. The new regulation of the digital financial market allows the issuance and circulation of the relevant instruments, aligning with European forecasts, in the utmost transparency, efficiency, and security for investors and promoting the competitiveness of Italian companies.
Cuchel also stressed that the digitization of processes for the issuance of new financial instruments, including through emerging technologies, can create added value and synergy among the various stakeholders directly involved and the professionals who assist them, including lawyers, notaries, and accountants.
Thomas Lacchetti, Chairman of the Board of Directors and Founder of Fleap, retracing the milestones achieved also thanks to his contribution from the issuance of the first digital native bond made in Europe to the admission to the Bank of Italy’s Regulatory Sandbox-said, “The potential of DLT and smart contracts can make the concept of Governance 2.0 easier and more efficient. Imagine a company that can standardize its processes and the products it issues to raise funds in the market.”
And on the future impacts of the latest decisions made by Parliament, he added, “We believe that this regulation has among its goals the introduction of DLT within the processes of SMEs, and we are aligned with this vision. At the basis of the development of our platform is the belief that this technology can become a tool with which companies will become more efficient and ready to face the new challenges that the market will put in front of them.”
Alessandro Negri della Torre, founder of the LX20 Law Firm, emphasizing the flexibility of the Italian legal system and its adherence to technological evolutions, explained, “The creation of a register would physiologically lead to the creation of a minimum level of organization of entities wishing to offer the service of record keeping as well as a general consistency of their internal procedures. The introduction of a reservation of activities should then lead to the application of an initial filter that selects companies with the resources, human, technical, and financial, to carry out the activity of registry manager.”
And on the new scenarios it could open to, he said, “If the market is able to integrate the new rules into economically viable solutions for SMEs, balancing security and ease of use of technology, it is certainly possible that the effects of the Decree will be relevant and positive for SMEs. In particular, we could see deeper digitization of the ownership structure of Italian companies, greater ease (and lower costs) in carrying out capital transactions, as well as greater security and transparency in certain mechanisms proper to corporate life.”
According to Negri Della Torre, the integration of DLTs into corporate law starting with the representation of financial products and instruments in digital form is a key piece in stimulating the transition of SMEs to the digital services market. And the security, transparency, and reliability profile of DLTs allows for exploring forms of automation of acts or decisions that are increasingly incisive and integrated in the context of corporate activities.
The numbers of the Italian fintech ecosystem
According to the latest data from the Milan Polytechnic’s dedicated Observatory, the Italian Fintech & Insurtech ecosystem is composed of 630 startups that raised €900 million in 2022 and €3.7 billion since 2009.
With Milan as the undisputed capital with 69 percent of total investments, the voice of all industry players will be heard by an audience of parliamentarians ready to embrace innovation.
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