The Cyprus Securities and Exchange Commission (CySEC) published a detailed Policy Statement on 13 September 2021, covering the registration process and operations of crypto asset service providers (CASPs). The Policy Statement has been awaited and followed CySEC’s first issued Directive for the prevention and suppression of money laundering and terrorist financing (Register of Crypto Asset Providers), as amended.
The following are the Key Highlights of the Policy Statement:
- Depending on the corporate structure, crypto assets either qualify as financial instruments under the Investment Services and Activities and Regulated Markets Act or as electronic money under the Electronic Money Act.
- Crypto assets can be a digital representation of value that is not issued or guaranteed by a central bank or public authority.
- CASPs should align their business with anti-money laundering/terrorist financing rules and enforce many obligations such as regulatory and operational requirements. For further details, please enquire as per CySEC’s Policy Statement which outlines the rules for CASPs.
- Existing businesses that demonstrate a material existing crypto-asset activity will need to submit an application before the end of October 2021 and be fully compliant with the AML/CFT Law and the Directives issued according to the AML/CFT Law.
- New businesses must submit an application to register with CySEC before commencing their operations in or from Cyprus.
- CySEC approach on territorial scope:
- CASPs operating from Cyprus must be registered with CySEC in order to be able to provide services and/or perform activities in relation to crypto-assets and will be regulated by CySEC.
- EEA domiciled CASPs who are registered with the competent authority of the respective Member State for the relevant services and/or activities and who as per Section 61E(2)(b) of the AML/CFT Law are exempted from the obligation to be registered with CySEC when providing services and/or undertaking activities in relation to crypto-assets in Cyprus, must submit to CySEC a notification form providing sufficient evidence in relation to their registration with the said EEA competent authority, before they commence their operations in Cyprus.
- CASPs registered in a Third Country, must be registered with CySEC in order to be able to provide services and/or perform activities, in relation to crypto-assets in Cyprus and will be regulated by CySEC.
Classes of crypto-asset services and activities, their initial capital and registration fees
| CASP Class | Type of crypto-asset activity and service | Initial Capital |
| Class 1 | CASP that provide investment advice | €50,000 |
| Class 2 | CASP that provide investment advice and/or any of the following services: • reception and transmission of client orders • execution of orders on behalf of clients • exchange between crypto-assets and fiat currency • exchange between crypto-assets • participation and/or provision of financial services related to the distribution, offering and/or sale of crypto-assets, including the initial offering • placement of crypto-assets without firm commitment • portfolio management. |
€125,000 |
| Class 3 | CASP that provide investment advice and/or any of the following services: • reception and transmission of client orders • execution of orders on behalf of clients • exchange between crypto-assets and fiat currency • exchange between crypto-assets • participation and/or provision of financial services related to the distribution, offering and/or sale of crypto-assets, including the initial offering • placement of crypto-assets without firm commitment • portfolio management and/or any of the following services: • administration, transfer of ownership, transfer of site, holding, and/or safekeeping, including custody, of crypto-assets or cryptographic keys or means enabling control over crypto-assets • underwriting and/or placement of crypto-assets with firm commitment • operation of a multilateral system, which brings together multiple third-party buying and selling interests in crypto-assets in a way that results in a transaction. |
€150,000 |
| Registration and renewal fees for all classes | €10,000 for the examination of an application
€5,000 annual renewal fee from year 2 onwards |
CySEC has announced the new developments related to CASPs with a Press Release on 13 September 2021 where it has also announced to the public its dedicated webpage for CASPs applicable rules and procedures. The Application forms for the authorization process have been announced to the public and are expected to be published soon.
For any further guidance regarding this procedure or if you require an initial consultation, please do not hesitate to contact our Law Firm at [email protected], +357 22 251 777 or +357 25 261 777 or please visit our office in Nicosia or Limassol.f