Italy is preparing to enhance its oversight of the cryptocurrency markets in compliance with the European Union’s Markets in Crypto-Assets (MiCA) regulatory framework. The new policy aims to tighten control over digital asset trading to combat insider trading and market manipulation effectively.

According to the latest draft policy, Italy will impose fines ranging from 5,000 to 5 million euros ($5,400–$5.4 million) for violations related to market manipulation and other financial crimes. These penalties will vary based on the severity and scope of the regulatory breaches detected.

Initially enacted in 2022, the EU’s MiCA regulatory framework presents significant challenges for blockchain firms and decentralized finance (DeFi) protocols. DeFi projects, in particular, face critical decisions about either fully decentralizing their networks to avoid compliance or adhering to MiCA’s stringent Anti-Money Laundering (AML) and Know Your Customer (KYC) requirements.

DeFi platforms that opt to maintain some level of centralization through foundations or intermediaries risk failing to meet MiCA’s criteria for a sufficiently decentralized network. This dilemma compels them to reconsider their operational structures to comply effectively with EU regulations.

Recent adjustments by major players like Binance and Uphold highlight the impact of MiCA on the crypto market. Binance has reclassified stablecoins for European users in accordance with MiCA guidelines, while Uphold has delisted several stablecoins to align with regulatory standards.

Despite regulatory challenges, stablecoins continue to garner optimism from industry leaders. Former U.S. House Speaker Paul Ryan and Circle CEO Jeremy Allaire foresee stablecoins playing a pivotal role in mitigating economic crises caused by inflationary pressures on fiat currencies. Ryan believes stablecoins could address U.S. dollar shortcomings, while Allaire predicts stablecoins could constitute up to 10% of the global money supply within the next decade.

As Italy prepares to implement stricter surveillance measures, the global crypto industry remains attentive to further developments and regulatory shifts under MiCA, impacting both centralized exchanges and decentralized financial ecosystems.