Licensing of Crypto Asset Service Providers

Cyprus is regulating Cryptos….

On the 1^st March 2021, CySEC issued the Anti-Money Laundering (AML) Amending Law 13(I)/2021 which transposed the 5^th EU AML Directive into a national law. One of the amendments brought forward with the new AML Law was the introduction of Crypto Assets Service Providers (CASP) in the Cyprus regulatory framework for the first time. Directive 269/2021 issued by CySEC on the 25^th June 2021 provides information on the following:

Register of CASPs;
Procedures for registering or deleting a CASP in the register;
Organisational and Operational requirements;
How to make changes in the information included in the CASP register.
CySEC Fees and Contributions.

What is a Crypto Asset?

Crypto asset means a digital representation of a value which is not issued by a central bank or public authority and is not guaranteed by them, it is not necessarily linked to legally circulating currency and does not have the legal status of currency or money, but is accepted by individuals as a medium of exchange or investment, it may be transported, stored or circulated electronically and is not:

Fiat currency; or
Electronic Money; or
Financial instruments as defined in Part III of the First Appendix of the Law on the Provision of Investment Services and Activities and Regulated Markets.

What is a Crypto Assets Service Provider?

A Crypto Assets 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:

The exchange between crypto-assets and fiat currencies;
Exchange between crypto-assets;
Management, transfer, holding, and/or safekeeping, including the custody of crypto-assets or cryptographic keys or means which allow the exercise of control on crypto-assets;
Offering and/or sale of crypto-assets, including the initial offering; and
Participation and/or provision of financial services regarding the distribution, offer, and/or sale of crypto-assets, including

Reception and transmission of orders;
Execution of orders on behalf of clients;
Dealing on own account;
Portfolio management;
Provision of investment advice;
Underwriting and/or placing of crypto-assets on a firm commitment basis;
Placing of crypto-assets without a firm commitment basis;
Operation of a multilateral system where multiple third-party buying and selling trading interests in crypto-assets are able to interact in the system in a way that results in a transaction.

Our CASP licensing services

Advisory on the optimum set up of your crypto business addressing your business objectives and at the same time ensuring compliance with regulatory requirements;
Serving as Promoter for your CASP application to CySEC, preparing internal policies and procedures, gathering the information required, and guiding you all the way until your receive your license.

Post Licensing Services

After obtaining CASP license by CySEC we provide you on-going support by assuming the role of the control functions of the Risk Manager and /or Internal Auditor, and by rendering support services to your in house appointed Compliance Officer and Anti-Money Laundering Compliance Officer.
In addition, we provide our clients with ongoing compliance support on implementing regulatory changes as well as changes of management or ownership, and assist with specialized risk management methodologies associated with crypto assets.

For more information on how we can help you with the CASP licensing process, other ongoing matters covered under the CySEC Directive 269/2021 as well as with ongoing compliance support, please Contact us.