On the 25th of June 2021, the Cyprus Securities and Exchange Commission (“CySEC”) published the Directive on the Register of Cryptoasset Service Providers (“the Directive”). The Directive was adopted in accordance with the powers granted to CySEC under the new Anti-Money Laundering Law 188(I)/2007 (“the Law”) and it came into force on the same day.
According to the Law, the following entities must be registered with CySEC, in order to provide services regarding cryptoassets:
It is noteworthy to mention that neither the Law nor any other legislation include any provisions regarding the granting of a licence of a cryptoasset service provider (“CASP”). However, a CASP should meet certain criteria in order to get registered with CySEC.
It is reminded that according the Law, a cryptoasset service provider is defined as
“a person who provides or exercises one or more of the following services or activities to another person or on behalf of another person,………:
“Financial Services regarding the distribution, the offer and/or the sale of cryptoassets” means the following services and activities relating to cryptoassets:
It is important to note that, although the definition of financial services under the new AML Law as to cryptoassets resembles the definition of investment services under MiFID II, cryptoassets under the Law explicitly exclude financial instruments as defined under MIFID II.
Main requirements for registration
The requirements for the registration of a Cryptoasset Services Provider (“CASP”) with CySEC include among others:
Capital adequacy and own funds
The CASP shall maintain, at all times, own funds equal to the higher of:
Initial capital references
Category 1: The initial capital of Euro 50.000 for the provision of investment advice.
Category 2: The initial capital of Euro 125.000 for the provision of services of Category 1 and/or any of the following services:
Category 3: The initial capital of Euro 150.000 for the provision of services of Category 1 or Category 2 and/or any of the following services:
The CASP should meet the capital requirements of Common Equity Tier 1 according to the Regulation 575/2013 regarding its initial capital and own funds.
Following the submission of a duly completed application, CySEC shall inform the applicant or its representative within six (6) months regarding its registration or not to the register.
Register of CASPs
The register of CASPs will be available to the public on CySEC’s website and the following information will be visible:
The Directive also provides for the withdrawal or suspension of the registration of a CASP, the procedure and notification of any amendments to the provided information by the CASP, the provision of information to clients or potential clients, conflict of interest rules and relevant fees payable to CySEC.
Please contact our Financial Services & Funds department at FinancialServices@kinanis.com for further information and assistance regarding the Register of Cryptoasset Service Providers.
This publication has been prepared as a general guide and for information purposes only. It is not a substitution for professional advice. One must not rely on it without receiving independent advice based on the particular facts of his/her own case. No responsibility can be accepted by the authors or the publishers for any loss occasioned by acting or refraining from acting on the basis of this publication.
Associate Lawyer - Financial Services & Funds Department
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