The draft of 2023 budget law finally fills the regulatory gap on cryptocurrencies or “crypto-assets”; the new and more organic regulations concern the treatment of digital assets in different aspects, irpef, the application of the relevant substitute tax also by non-financial operators, stamp duty, ivafe and tax monitoring.

We talked about it with Edoardo Belli Contarini, Partner – Fantozzi & Associati, and Raffaello Fossati, Associate Partner – Fantozzi & Associati.

Why is the role of tax rules critical in the crypto world?

As for all financial instruments, taxation affects the net income of investors thus playing a crucial role in the choice of the asset allocation. In recent years, cryptocurrency price fluctuations attracted the attention of investors but the uncertainty over the tax treatment of capital gains and losses in various countries, among which is also Italy, together with the lack of proper regulation of the industry may have discouraged the more prudent investors.  For instance, in 2016 the Italian tax authorities affirmed that cryptocurrencies should be assimilated to standard foreign currencies with the effect of taxing the related trading only when certain circumstances were met. In addition, cryptocurrencies maintained abroad (also via exchanges) should have been disclosed in the tax return for monitoring purposes. Such an approach was not totally consistent with the legal definition of digital currency (see art. 1 legislative decree no. 231/2007 and art. 1 legislative decree no. 184/2021), according to which blockchain currencies are not at all similar to fiat currencies.

Which are the changes introduced by the 2023 Budget Law?

With the 2023 Budget Law, the Italian legislator finally fills the regulatory gap on cryptocurrencies with a more organic discipline covering personal and corporate income taxes, stamp duty, so called “IVAFE” and tax monitoring. In particular, the Budget Law adds a specific type of income related to the sale for consideration, exchange, refund or holding of crypto-assets, exceeding 2,000 euros in each tax period. In addition, it provides for the franking of crypto assets with reference to market value as of 1^st January 2023, subject to the payment of a 14% substitute tax and regularization of the taxpayers’ position for previous years. In such respect, the regularization allows taxpayers to remedy the obligations due up to 31^st December 2021 by means of amended tax returns and payment of a substitute tax for past income, corresponding to 3.5% of the value of the assets disclosed, as well as a penalty reduced to 0.5% of the same value for failure to indicate crypto activities in the tax return. On the opposite, the Budget Law introduced the possibility to carry forward (over a 4-year period) and offset any losses incurred.

How do you think this will impact the crypto world this year?

Despite some technical aspects that may undermine the benefits provided by the new discipline (e.g., criminal penalties may apply), the clarifications provided together with the possibility to have certainty on the past should be welcomed by the investors. They shall carefully evaluate the opportunity to disclose their crypto assets and consider the corresponding value as of 1^st January 2023 in light of recent reductions in market prices. In case the franking of assets is deemed to be beneficial, the payment of the 14% substitute tax should be performed by 30^th June 2023 (wholly or first instalment).

Considering the downward trend in cryptocurrency prices occurred in 2022, the cost of the substitute tax can be considered as appealing to the investors that are not able to provide evidence of their purchase prices or in case their purchase prices were very low, especially if they are considering the possibility of disinvestment in the near future.

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Interview with Antonio Lafiosca, Co-Founder & COO at Opyn

What is the need from which Opyn Pay Later was born and who is it aimed at?

Opyn Pay Later is a type of short-term interest-free financing dedicated to the B2B market. The service allows, on the one hand, sellers to offer an additional credit service to the customer, and on the other hand, buyers to pay only part of the order at the time of purchase and to defer the rest of the amount in installments. We have found that the main need in the market is for more flexibility and simplicity in payment methods: well, with Opyn Pay Later it is possible and this makes the B2B world more inclusive and on par with the B2C world, always one step ahead on these issues. In particular, from the surveys we have carried out, it appears that the merchant’s need is to meet the customer’s availability without compromising its stability. Thanks to Opyn Pay Later, the seller gets 2/3 of the amount immediately, thus reducing the risk that any delays in payment will affect its liquidity. The buyer, on the other hand, has more time to pay, thus facilitating cash flow management, as well as the ability to up-sell and cross-sell product.

Why is it something new within the buy now pay later market?

Opyn Pay Later is the first Italian “Buy Now, Pay Later” service dedicated to the B2B market. Indeed, while the B2C sector is already well developed and known, the B2B sector has yet to emerge. Yet, according to a study by Hokodo, this segment is worth 2.5 times that dedicated to consumers. For this reason, we wanted to take up the challenge of devising and proposing a solution that could meet all the needs the business-to-business market requires.

Another innovation brought by Opyn Pay Later is that it can be used for both digital purchases (both remote and e-commerce) and physical in-store purchases through the “Pay by link” system for purchases up to 3K euros.

How do you expect the “Buy now, pay later” market to evolve on a European and international level?

The service is already active for the Italian market, but our goal is to reach Europe as well, during 2023.

We have to consider that the “Buy Now, Pay Later” market, according to Straits Research forecasts, will be worth more than $3.6 trillion by 2030 (with a 45% growth from 2022). Only in Italy, the sector will come to be worth 14.5 billion euros in 2025 (with an increase of 10.9% since 2021 – data from the B2C eCommerce Observatory of Politecnico di Milano). A market which, also internationally, is driven by the old continent: 8 of the 10 top players are located in Northwestern Europe, particularly Sweden and Germany. So we are talking about a sector expected to grow strongly in the coming years and in which we want to enter with a solution that differentiates itself from competitors.

Lexia Avvocati is an independent law firm with extensive knowledge and experience in fintech, blockchain technology and Decentralized Finance (DeFi) dynamics. The firm supports Italian and foreign clients, such as banks, funds, exchange platforms, wallet providers and digital asset providers, in the launch and management of their operations in Italy and in dealing with the relevant regulatory authorities. Thanks to its multidisciplinary team, Lexia advises in relation to all issues affecting companies operating in the sector, starting from corporate, tax and regulatory issues to the fields of personal data protection, cybersecurity, intellectual property and consumer protection. We talked about it with Angelo Messore, partner at Lexia, and Francesco Dagnino, managing partner and founder.

What do you believe are the most important challenges to date from a legal perspective that the Fintech world is facing?

One of the main challenges for fintech projects is definitely the absence of a clear legal framework. Indeed, it is well known that technology develops faster than the law. But if the law does not provide a transparent environment for innovation, there cannot be a level playing field between innovative projects and market incumbents (or between domestic players and foreign competitors). An example can be seen in the recent EU regulation on crowdfunding, which Italy has not yet implemented. We know of a number of Italian crowdfunding platforms that are waiting for the Italian state to publish implementing regulations in order to become fully operational on a European scale. In these cases, the lack of a well-defined regulatory environment creates a clear competitive disadvantage for fintech companies.

Are there any major new developments in Europe that those operating in the fintech sector need to be aware of?

European institutions are often criticized for their overly conservative approach to regulating fintech entities compared to other countries. Indeed, they try to strike a balance between consumer and investor protection on the one hand and openness to technology and financial innovation on the other hand – a task certainly not easy to accomplish.
In recent years, the EU has taken several steps to stimulate innovation in the financial market, notably through the Fintech Action Plan and the Digital Finance Package. In this context, a key role in shaping the rules for Fintech operators will be played by the recently approved EU regulation on the “pilot regime” for tokenized financial instruments and the EU regulation on cryptocurrency markets. Other initiatives that Fintech operators should keep an eye on include the ongoing review of the EU anti-money laundering framework, the entry into force of the EU regulation on crowdfunding, the proposed legislation to create a legal framework for the use of artificial intelligence, and the current discussion on the regulation of buy-now-pay-later (BNPL) services.

When you work along with an emerging fintech company, what are the most frequent issues you face and how do you support it?

The crucial challenge we meet with our clients is to bridge the gap between the business idea they have and its implementation in accordance with the current regulatory framework. When working on Fintech projects, there are many technical, operational, business, financial, marketing, and legal issues. However, sometimes Fintech companies decide to postpone legal analysis by focusing on the other aspects of their project. In doing so, they underestimate the importance of the legal framework for defining their business model.
As legal advisors, we must first understand the innovative sector in which the client operates and its business model in order to design the best legal solution. Fintech companies operate in a highly regulated environment and must be aware of all the legal complexities of the sector in which they operate, as well as the opportunities that the regulatory framework offers them. We support founders in defining and structuring their business idea taking into account all relevant legal constraints, as well as in approaching regulators to identify the appropriate legal framework for their project.

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EU Digital Finance Platform

Interview with Christine Mai, Digital Finance Unit, European Commission

Earlier this year, the European Commission launched the EU Digital Finance Platform, a collaborative space bringing together industry and public authorities to support innovation in the EU’s financial system. Can you talk more about the initiative and from where this idea came?

The EU Digital Finance Platform is a key initiative announced in our Digital Finance Strategy of September 2020. On the one hand, this new website builds on the Commission’s outreach to the fintech community which highlighted the challenges facing innovative financial firms seeking to scale up their offerings across Europe. On the other hand, the Platform is a project that we continue to work on in close cooperation with supervisors and notably the European Supervisory Authorities. The objective is to build dialogue and offer practical support to innovative financial firms. In this way, we hope to help overcome the fragmentation we still see in the market for digital financial services and foster innovation for the benefit of citizens and businesses.

This platform provides different features. One of them is Digital Finance Observatory, acting as a single point of contact and knowledge for everyone interested in innovation and new technologies in the financial ecosystem. What are the available options, and what can a fintech do with them?

The Digital Finance Observatory is designed to stimulate interaction. Registered users can share content here and promote events, hackathons and research linked to digital finance. And fintechs can literally put themselves on the map: our European fintech map, which we hope will become a space that showcases Europe’s vibrant fintech ecosystem and lead to new discoveries and connections. At the moment, the map features only two Italian firms – so I would encourage your members to add their firms. It only takes a couple of minutes! We also have a Policy corner in this part of the Platform where we collect information on political and legislative initiatives at the European level, regulatory news and funding opportunities.

By browsing into the Platform website is possible to see, right next to the Observatory, a part indicated as ‘European Forum for Innovation Facilitators Gateway’. Can you tell us a bit more about it?

The Gateway is a single access point built to offer practical support to financial firms. For the first time ever, the information needed to contact national supervisors, as well as links to their innovation hubs, regulatory sandboxes and national licensing requirements can be found in one place. This section of the EU Digital Finance Platform also hosts information about the work of the European Forum for Innovation Facilitators. The Forum that brings together representatives of national supervisors in charge of innovation, coordinated by the European Supervisory Authorities. The objective is to foster exchange and mutual learning among the authorities involved, encouraging supervisory cooperation and convergence – another important factor in overcoming fragmentation. 

In the spirit of the European Forum for Innovation Facilitators and the collaboration among National Authorities, one of the platform’s pillars is “Cross-border testing”. Companies seeking to involve multiple authorities in a testing process can apply through the EU Digital Finance Platform via an online form. Could you please explain how this option would work?

Cross-border testing is a new initiative, driven by the European Forum for Innovation Facilitators and hosted on the EU Digital Finance Platform. The idea is to make life easier for financial firms that want to offer their products and applications across national borders. They can fill in a form and upload it on the Platform to launch a request for cross-border testing, contacting multiple national supervisors in one step. These supervisors can play different roles: regulatory sandbox, observer and recipient of test findings, with the opportunity to work together on specific cases. The testing itself will still take place at the national level, according to national laws, and any decisions on the award of a licence will be taken by the respective national authority, but we think this is a big step forward.

What are the next steps for this platform? Do you have any aspects you are particularly working on, and that will be released in the future? 

We are currently working to prepare the second phase of the Platform. The main novelty we want to add will be a Data hub. This will be a space where we intend to make non-personal, non-public data available to financial firms so that they can use it to test innovative solutions in close contact with supervisors. Our objective is to complement national innovation hubs and sandboxes as well as cross-border testing and create a new tool to support data-driven innovation. A lot of fine-tuning will still be necessary before we launch the Data hub – in the second half of 2023 according to current planning – and I hope that Italian fintechs and their feedback will play an active role in helping us build an attractive and useful offering here.

This agreement reinforces a 5-year partnership and confirms Société Générale and Mastercard determination to support the rapid growth of Treezor as a European BaaS company. Being already a Principal Member of Mastercard, Treezor has onboarded some of the most disruptive fintech and both Mastercard and Treezor have supported the development of successful new players including Swile, Lydia, Qonto, Shine, and Pixpay.

As part of the agreement, Mastercard has made a minority investment in Treezor, which will help provide additional support through improved services, communication means, multi-rail payment infrastructure, and sales support from Mastercard’s local teams to improve Treezor’s success with fintech and corporates across Europe.

Mastercard’s technology, expertise, local teams, and support programs for fintech will accelerate Treezor’s European development across Benelux, Germany, Italy and Spain. Treezor will have priority access to new Mastercard products such as credit services, Open Banking, and the carbon calculator as well as the fully digital experience card programme ‘Mastercard Digital First’.

According to the Country Manager of Mastercard France, Mastercard has supported the BaaS player in the development of its product range and in its international expansion since Treezor inception. Mastercard has also accelerated Treezor’s neobanks onboarding via the Fintech Express programme, which Treezor has joined since July 2020. Mastercard has been a factor in accelerating the European expansion of Treezor, which is authorised to operate in 25 countries as an Electronic Money Institution and is regulated by the ACPR (French Prudential Supervisory Authority).

Société Générale group acquired Treezor in 2019 and has provided it with the expertise of a major international banking group in order to also satisfy the company’s financial needs and the shareholder stability that it needs to develop. Treezor also leverages Société Générale group to implement new payment services via API (e.g. Instant Payments, insurance, credit services) for regulated institutions and large corporates.

Congratulations to Treezor on this great news, which confirms the growth of our corporate network and proves once again that collaboration between different players can ensure growth for the whole ecosystem internationally.

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Renting is a service designed to help companies innovate and equip themselves with technologies to run their business in a sustainable and flexible way by choosing to “use” instead of “purchase”.

Selfrent has created a new digital rental platform named Difrently to allow individual companies and SMB customers to finalize rental contracts in real time, choosing from a catalogue with thousands of assets.
Difrently stands for a “different way of renting”, an omni-channel digital service for B2B customers based on ecommerce. 

Selfrent relies on 3 strategic pillars to make a complex process simple through an innovative customer Journey from asset search to contract signing: 

• Simple: it’s a straightforward renting experience.

• Affordable: it is a small monthly fee for all desired products.

• Fast: it is possible to subscribe the rental contract in 5 minutes. 

How does it work?
Let’s find it out with Giuliano Gaviraghi, Co-Founder at Selfrent.

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Risolvi il tuo Debito is a company that addresses a specific target group of people who want to but are no longer able to pay their debts. Therefore, agreements with the relevant credit institutions lapse. 

Risolvi intervenes by getting to know each customer and his situation individually. 

Using Machine Learning and Big Data tools, it develops a savings programme that will get customers out of over-indebtedness. 

At the same time, while clients are following the programme, Risolvi il tuo Debito contacts their respective creditors and, through their versatile tools, they reach agreements that satisfy both parties.

The first operation was set up in Mexico in 2009 in the wake of the 2008 economic crisis, that affected much of the global economy. They stepped in to help people who were over-indebted and realised that these people were not only over-indebted because of the crisis, but also because of bad economic education.  

This system has so far led Risolvi il tuo Debito to 400,000 clients worldwide and to resolving 300,000 debts. 

How is the company growing nowadays?

We talked about it with Piero Pietropinto, Consulting Team leader at Risolvi il Tuo Debito.

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“Open Innovation is a winning and existential choice for companies, because it is impossible to lock knowledge inside the company in a global world with the Internet. If you lock knowledge inside a company, you struggle to innovate because you always start from limited cultural cues by definition, only internal cues.”

Andrea Ciliberti, CEO at Bcode.

Bcode is a Blockchain System Management software, specializing in notarizing data on blockchain, creating and managing tokens, and integrating blockchain solutions into business processes. As a spin-off of Politecnico di Milano, Bcode has created the first ready-to-use and easy-to-use platform that allows companies and freelancers to build and launch their own project on blockchain by notorizing data and creating tokens without having to hire a team of developers.

Its team consists of developers and software engineers who all have past experience in blockchain and come from consulting and project development in the blockchain field.

If you think that is not enough, the team includes professors and researchers as well and they have a strong business and marketing background in order to deeply understand market demands and turn those demands into easy-to-use products and solutions.

The company was born in late 2020, in 2021 it ended the first year with a balanced budget and in 2022 Bcode is basically doubling its revenue.

What is the secret? Open Innovation, of course.

Collaboration with technology companies through sales channels is the primary driver behind Bcode’s growth. They definitely understand that Open Innovation is not a fad, but a winning strategy and it’s existential for companies nowadays.

Let’s find out how they do that!

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Imagine for a moment that you are the manager of an airline. You are facing stark competition and you would like to strengthen your customer loyalty. If you could offer your customers, say, a debit card, you could award them loyalty points whenever they pay with their card. Then, each time your customers use their card, they would interact with your brand. By analyzing your customers’ spending behavior, you could understand them better and offer them more tailored services.

What about if you could offer your customers an online loan for their flight tickets directly on your website? This way, your customers could finance their journeywithout ever having to interrupt their experience with your app. You could increase the number of flight tickets you sell and directly influence the amount your customers spend. A loan also represents a much closer customer relationship with far more touchpoints than just a single sale.

These are just some of the benefits that Banking-as-a-Service is able to provide. In this article, Solaris – the pan-European leader in Banking as a Service – shares its vision for the industry and defines the main development paths in which major economic sectors might evolve under the impetus of the “banking revolution” brought by integrated and embedded finance.

With the surging number of new banking and fintech business models emerging on the scene, it can be hard to keep them all apart. The term “Banking as a Service”, especially, still has many scratching their heads. But scratch no more! This article will guide you through the jargon jungle of the new banking business models in our complete overview.

There are dozens of ways non-banks can improve their customer experience and boost their revenue by offering their own banking services. However, if you want to offer banking services, effectively every government in the world requires you to own a banking license. And due to the systemic relevance of banks to the functioning of the economy, such a license is difficult to obtain. Acquiring a license imposes not only significant capital requirements, but more importantly compliance with strict regulations on money laundering, banking secrecy and deposit protection, to name a few. This is where Banking as a Service comes in.

Banking as a Service (or BaaS for short) describes a model in which licensed banks integrate their digital banking services directly into the products of other non-bank businesses. This way, a non-bank business, such as an airline, can offer their customers digital banking services such as mobile bank accounts, debit cards, loans and payment services, without needing to acquire a banking license of their own.

The banks’ server communicates via APIs and webhooks with that of the airline, enabling your customer to access banking services directly through your airline’s website or app. Your airline never really touches the customer’s money, it acts simply as an intermediary, meaning it is not burdened by any of the regulatory duties a bank has to fulfill.

Thus, with BaaS, pretty much any business can become a banking provider with nothing but a few lines of code. That’s why BaaS is also often referred to as white-label banking, since the banking services are delivered through the branded product of the non-bank. Next toSolaris, other providers in Europe’s growing BaaS landscape include ClearBank, RailsBank and Starling Bank. Across the pond, established banking giants are also launching BaaS projects next to their existing offering, such as BBVA in the US.

Is Banking as a Service the same as open banking?

Not really. The two models often get confused, as open banking also involves banks connecting to non-banks via API. However, the models serve entirely different purposes. In BaaS models, non-bank businesses integrate complete banking services into their own products. In open banking models on the other hand, non-bank businesses merely use the bank’s data for their products. In the industry, these non-bank businesses are called third party service providers (TPPs).

Let’s look at an example. Financial management apps are prominent TPPs that benefit from open banking. They aggregate information from all of your different bank accounts into one application, enabling you to better oversee your finances. This can help you achieve savings goals or improve your spending habits. In order to aggregate the information, the app needs to draw transactional data from all of your bank accounts. It does this via an API integration to the banks’ systems.

Often, this API integration will be provided by yet another party. They are generally categorized as API banking platforms, and can be considered as the middle men connecting the banks with TPPs like the financial management app. They provide the actual API layer that sits on top of the bank’s system that enables the flow of data between the bank and the TPPs. Prominent examples in the German market include players like Finleap connect, Ndigit and Fintecsystems.

The key thing to remember though, is that different to BaaS providers, the TPPs are not able to perform banking services (such as lending or taking deposits), as they don’t hold full banking licences themselves. They are simply repurposing account information from your existing bank accounts to provide insights or trigger transactions.

And what about platform banking? Where does that fit in?

Platform banking is a different story altogether. This refers to banks that integrate services from other fintechs to augment their existing offering. So, for example, a bank might integrate a robo-advisor into their app to enable their customers to access investment products from the same account from which they do their day-to-day banking. Platform banking can thus be described as the inverse of Banking as a Service. In the platform banking model, the bank owns the customer and integrates services from fintechs. In the BaaS model, the customer is owned by the fintech/non-bank and integrates services from the bank.

Banks often use the platform banking approach as a defensive strategy to prevent losing their customers to savvier fintechs. By integrating the fintechs’ services into their platform, they can at least keep their customers in their ecosystem, even if it means handing over the lion share of the revenue to the fintech.

And there we have it. We hope Solaris could shed some light into the potpourri of technical terminology and business models in the evolving banking and fintech world. Still, this is just a snapshot of a slice in time. The banking landscape is in continuous flux with new innovators constantly stepping on the scene. So, watch this space to stay up to date on industry developments.

This content is provided by our Corporate Member Solaris

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Notarify is one of the leading international Blockchain service providers, with a network of thousands of customers and present in different countries. Since its foundation in 2018, the company leverages an integrated model that provides solutions for data and document notarization in Blockchain: from storaging to sharing, from identification and KYC to electronic signature.

Notarify services touch different areas of expertise: from Fintech, Insurtech, and Legaltech to services dedicated to training and education, through software integration, and even for public administration to simpler services such as the commercial or logistics area.

On the funding side, they have raised almost one million euros thanks to two crowdfunding campaigns and they are currently expanding in the Italian market with important partnerships. Furthermore, they have already opened offices in Luxembourg and the Arab Emirates.

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