Italy approves 26% capital gains tax on cryptocurrencies

The Italian Senate approved the new tax rate for crypto trading as part of the budget legislation for 2023.

On Dec. 29, 2022, days before the year’s end, Italy’s Senate approved its budget for 2023, which included an increase in taxation for crypto investors — a 26% tax on capital gains on crypto-asset trading over 2,000 euros (approximately $2,13 at time of publication).

The approved legislation defines crypto assets as “a digital representation of value or rights that can be transferred and stored electronically, using distributed ledger technology or similar technology.” Previously, crypto assets were treated as foreign currencies in the country, with lower taxes.

As reported by Cointelegraph, the bill also establishes that taxpayers will have the option to declare the value of their digital-asset holdings as of Jan. 1 and pay a 14% tax, incentives that are intended to encourage Italians to declare their digital assets.

Other changes introduced by the budget law include tax amnesties to reduce penalties on missed tax payments, fiscal incentives for job creation and a reduction in the retirement age. It also includes 21 billion euros ($22.4 billion) of tax breaks for businesses and households dealing with the energy crisis.

Related: MiCA bill contains a clear warning for crypto influencers

Giorgia Meloni, the first woman to serve as Italy’s prime minister, received wide support for her bill from the legislative body, even though she promised dramatic tax cuts when elected in September.

According to local media reports, measures from Italy’s government to reduce gas consumption across the country including over 15 days without central heating for buildings, with the population being asked to turn their heating down one degree and turn it off one hour more per day during the winter.

Italy‘s legislation follows the approval of the Markets in Crypto Assets (MiCA) bill on Oct. 10, establishing a consistent regulatory framework for cryptocurrency in the 27 member countries of the European Union. MiCA is expected to come into effect in 2024.

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Italy to create the crypto art Renaissance: NFT market report

Research and Market’s latest NFT market report for Italy predicts a 47.6% growth in the country’s NFT market by the end of 2022.

Italy is one of the cultural hubs of Europe, with centuries of history, art and culture. Now, it is also posed to create the crypto art Renaissance via its nonfungible token (NFT) market, says a new report.

Data from Research and Market’s “Italy NFT Market Intelligence and Future Growth Dynamics Databook” says the country is projected to have a growth of 47.6% in its NFT market by the end of 2022.

This would make the Italian NFT market hover around a $671 million valuation.

Moreover, over the next five years, Italy’s NFT industry is forecasted to have a steady upward compound annual growth rate of 34.6%. The spending value for NFTs is anticipated to hit $3.6 billion by 2028.

According to the report, some of the country’s success with NFTs comes from its vibrant art and culture scene. Major Italian luxury fashion brands such as Gucci and Dolce & Gabbana, have been some leaders in the adoption of Web3 technologies in the industry.

They not only represented an innovation for Italy but across the entire fashion industry. Over the last year, Dolce & Gabbana generated $25.6 million worth in revenue from their NFTs, and Gucci $11.5 million.

These brands also led initiatives to bring their communities into the metaverse through digital events and wearables, many of which incorporated NFTs.

Fashion brands aren’t the only forces pushing Italy into the NFT spotlight. The country’s rich cultural history has also seen some Web3-related activities.

An NFT project called the Monuverse, which is preserving historical sites via digital assets, used the Arco della Pace, or the Arc of Peace, in Milan, Italy, as its first subject.

Italian artists even have their own management organization to help Italian NFT artists, called “crypto renaissance,” which harks back to the country’s emergence as an art leader during the Renaissance period.

Related: What is an NFT whitelist, and how can you join one?

Meanwhile, the general atmosphere of the crypto industry in Italy is also picking up. Recently, the blockchain developer Algorand will use its technology to help support banks and insurance guarantee platforms in Italy. In November, Gemini received the green light to operate in Italy.

On Dec.1, however, Italy released its budget documents for the upcoming year which revealed a new 26% capital gains tax to be imposed on crypto profits in the upcoming year.

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Algorand to support bank and insurance guarantees platform in Italy

This is the first time an EU Member State will use blockchain technology for bank and insurance guarantees, according to Algorand.

Layer-1 blockchain platform Algorand has been chosen as the public blockchain to support an “innovative digital guarantees platform” to be used in Italy’s banking and insurance markets.

The Algorand-supported platform is expected to be launched in early 2023. According to Algorand’s Dec. 13 announcement, this is the first time an EU Member State will use blockchain technology for bank and insurance guarantees.

A bank guarantee is when a lending institution promises to cover a loss if a borrower defaults on a loan. It’s an alternative to providing a security bond or a deposit to a supplier or vendor. An insurance guarantee is similar but is offered by an insurance company rather than a bank. 

Algorand said that blockchain technology was ideally suited for the “Digital Sureties” platform because of its fast, efficient, low-cost, and scalable data transactions, and its ability to provide protection against fraud.

The blockchain-backed Digital Sureties platform is being developed by The Research Center on Technologies, Innovation and Finance of the Catholic University of Milan (CETIF) and is a part of Italy’s National Recovery and Resilience Plan (NRRP), an initiative set to boost Italy’s economic recovery following the COVID-19 crisis. 

Related: Algorand Foundation outlines $35M exposure to crypto lender Hodlnaut

Federico Rajola, professor at CETIF said they chose Algorand for its “unparalleled level of innovation” among permissionless DLTs and its “leadership in sustainability,” adding: 

“Our goal is to help Italy not only recover from the economic impact of Covid-19, but also excel through innovation and leadership […] We believe these platforms can and will dramatically contribute to the country’s competitive sustainability for the benefit of all.”

In September, Cointelegraph reported that Algorand had increased its transaction speed, processing capacity, and cross-chain functionality with a major protocol upgrade. The layer-1 blockchain network implemented State Proofs to its mainnet, which enables trustless communication between different blockchain protocols. The upgrade increased Algorand’s processing speed from 1,200 to 6,000 transactions per second.

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Italian government will provide $46 million in subsidies for blockchain projects

Italian government will provide $46 million in subsidies for blockchain projects

All companies developing IoT, AI or blockchain technology will be eligible to apply for government subsidies provided the funds will be used in specific sectors, such as health.

The Ministry of Economic Development of Italy has announced that certain blockchain projects will qualify to apply for up to $46 million in government subsidies starting from September.

In a Tuesday announcement, the Ministry said companies and public or private research firms will be able to apply for funding from the government for the development of projects related to artificial intelligence, the Internet of Things and blockchain technology. The fund will have an initial budget of 45 million euros — roughly $46 million at the time of publication — for expenses and costs from 500 thousand (worth $512,150) to 2 million euros ($2,048,600) as part of the Italian government’s goals for investments in technology, research and innovation.

“We support companies’ investments in cutting-edge technologies with the aim of encouraging the modernization of production systems through management models that are increasingly interconnected, efficient, secure and fast,” said Minister of Economic Development Giancarlo Giorgetti. “The goal of competitiveness requires the manufacturing industry to constantly innovate and use the potential of new technologies.”

The government directive was made possible by a decree in December 2021 establishing criteria for using the fund and a subsequent one in June 2022 in which the Ministry set the terms and conditions for submitting applications. According to the decree, companies of any size will be eligible to apply for subsidies provided the funds will be used for IoT, AI or blockchain in sectors including industry and manufacturing, tourism, health, the environment and aerospace.

Related: ‘Bitcoin-thematic’ ETF lists on Italian stock exchange Borsa Italiana

A member of the European Union, Italy would likely be affected by recent regulations agreed upon by the EU Parliament aiming to bring crypto issuers and service providers within its jurisdictional control under a single regulatory framework. The country’s securities regulator, the Italian Companies and Exchange Commission, or CONSOB, has previously warned residents about the possible risks of crypto investments, while the Organismo Agenti e Mediatori is largely responsible for granting regulatory approval for crypto service providers — in May, the regulator gave the green light to major crypto exchange Binance to open a branch in Italy.

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Bank of Japan official calls for G7 nations to adopt common crypto regulations

Bank of Japan official calls for G7 nations to adopt common crypto regulations

The Bank of Japan has warned G7 nations that a common regulatory framework for cryptocurrencies needs to be introduced quickly, as current rules do not take into account the potential for digital assets to be used to skirt sanctions.

A senior official from the Bank of Japan (BOJ) has warned G7 nations that a common framework for regulating digital currencies needs to be put in place as quickly as possible. 

G7 refers to the Group of Seven, an inter-governmental political forum made up of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States.

The statement comes in response to the continued conflict between Russia and Ukraine, as cryptocurrencies and their potential applications for skirting economic sanctions falls under increasing scrutiny.

The head of the BOJ’s payment systems department, Kazushige Kamiyama, told Reuters that using stablecoins makes it very easy to “create an individual global settlement system,” which would in turn make it easier for nation states to evade more traditional and regulated payment systems that use the U.S. dollar, euro or yen for settlement.

Kamiyama added that a sense of urgency is paramount if the G7 nations are to effectively coordinate to regulate cryptocurrencies and digital assets, as the current regulations do not fully consider their growing adoption and proliferation throughout the world.

Kamiyama added that this regulatory framework would affect the design process of Japan’s own central bank digital currency (CBDC) — the digital Yen. There would be a need to carefully balance individual privacy with concerns about money laundering and other white collar crimes.

The governor of the BOJ, Haruhiko Kuroda, announced at Japan’s FIN/SUM fintech summit on March 29 that it has no plans to introduce a CBDC anytime soon. Kuroda explained that the BOJ plans to carefully consider the expected roles of central bank money in the lives of Japanese citizens.

“We consider it important to prepare thoroughly to respond to changes in circumstances in an appropriate manner, from the viewpoint of ensuring the stability and efficiency of the overall payment and settlement systems.”

Related: Former BOJ official warns against use of digital yen in the financial sector

Kuroda’s remarks come just four days after the BOJ announced that it is moving onto phase two of testing the viability of a Japanese CBDC. Phase two is set to begin this month, so any new regulations decided upon by the G7 will have some impact on this process.

Kuroda said that a decision on whether to issue CBDC in Japan will most likely be reached sometime in 2026, depending on the speed at which CBDC adoption occurs throughout the rest of the world.

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