ITALY Law and Practice Contributed by: Francesco Paolo Patti and Marta Vittoria Colombo, Studio Patti
is to allow controlled experimentation while enabling authorities to observe and better understand emerg- ing technologies and business models. This framework is complemented by Italy’s regime on digital financial instruments based on distributed ledger technology, adopted in connection with the EU DLT Pilot Regime. Unlike the sandbox, the DLT frame- work provides a stable legal basis for certain activi- ties, including the issuance and transfer of financial instruments through distributed ledger-based regis- ters and the operation of DLT trading and settlement systems. Notably, the regime has already moved beyond a purely theoretical stage: four entities have been authorised as “ responsabili del registro ”, includ- ing a major institutional player, Cassa Depositi e Pres- titi, which signals growing involvement of established financial actors in DLT-based market infrastructure. In practice, innovators must determine whether to pursue a sandbox-based approach or to enter directly into a formal authorisation or registration regime. The sandbox is generally suitable for projects at an experi- mental stage or where legal classification remains uncertain. Conversely, where the business model can be clearly framed within an existing regulatory cat- egory, operators may opt for direct authorisation, for example under MiCAR, or registration under the DLT framework. This dual approach reflects the Italian regulatory strategy of combining controlled experimentation with structured pathways to full compliance, allowing innovation to develop within a defined and supervised legal perimeter. 1.1.3 Regulation of Blockchain Technology Italy’s regulatory attitude toward blockchain can be characterised as cautious, structured and anchored in investor and market protection. Public authorities do not approach blockchain as a sector to be either pro- moted unconditionally or restrained outright. Rather, innovation is channelled within existing legal princi- ples, with an emphasis on governance, transparency and accountability. The implementation of MiCAR reflects this posture: technological novelty does not justify a relaxation of standards, but instead requires clearer allocation of responsibilities and more robust
internal controls. As a result, business models that incorporate “compliance by design” are increasingly favoured, particularly where they can demonstrate reliability in areas such as marketing practices, conflict management, operational resilience and complaint handling. At the same time, Italy does not confine blockchain regulation to crypto-assets alone. Distributed ledger technology is expressly recognised as a potential market infrastructure tool, even where the underlying asset does not fall within the MiCAR perimeter. The legislative framework on digital financial instruments provides a clear illustration. It allows for the issuance and circulation of financial instruments through book entries on a distributed ledger-based “register for digital circulation”, to which specific legal effects are attached. These include rules on the opposability of entries, the exercise of voting rights, the attribution of payment entitlements and the creation of security interests. In this context, blockchain is regulated in functional terms, focusing on operational roles and responsibilities. The framework requires clarity as to who operates the register, the minimum technical and organisational standards it must satisfy, the proce- dures for handling errors or loss of access, and the allocation of liability among participants. Outside the financial instruments perimeter, block- chain may also be deployed through private legal arrangements. A notable example in the Italian con- text is the “ contratto di rete ”, which allows networks of enterprises to define governance structures, data- sharing rules and operational responsibilities contrac- tually. In such cases, the distributed ledger serves as a shared record-keeping mechanism, while legal effectiveness depends on the alignment between the technological layer and the contractual framework, as well as compliance with any applicable sector-specific regulation. With respect to data protection, blockchain-based applications are subject to the general framework established by the General Data Protection Regulation (GDPR), as implemented in Italy through the Privacy Code (Legislative Decree No 196/2003, as amended). The GDPR adopts a technology-neutral approach, meaning that blockchain is neither inherently compli-
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