Areas of Practice
24th Jun 2021
A primer on burgeoning crypto-asset regulation in Cyprus
In Cyprus, the Prevention and Suppression of Money Laundering and Terrorist Financing Law, L188(I)/2007 (the “AML Law”) was amended earlier this year through L13(I)/2021 (the “Amending Law”), in order to harmonise domestic legislation with the provisions of the 4th and 5th AML Directives (Directives (EU) 2015/849 and 2018/843). The 5th AML Directive made several amendments to the 4th AML Directive (together the “AML Directives”) effectively extending AML/CTF controls to providers of exchange services between virtual currencies and fiat currencies and providers of custody services for virtual currencies.
As a result of amendments introduced by the 5th AML Directive, EU Member States are required to ensure that such providers are registered and that persons who hold management functions or are beneficial owners of such providers are fit and proper. The Amending Law was published in the Official Gazette of the Republic of Cyprus on 23 February 2021 and transposed the 5th AML Directive’s provisions into the AML law. The Cyprus Securities and Exchange Commission (“CYSEC”) has been designated as the competent supervisory authority for matters relating to crypto-asset regulation and has been granted powers to regulate through the issue of Directives. As at the time of writing CYSEC has not yet published any Directives pursuant to the powers that it has been granted and as such, the regulatory framework for crypto-assets in Cyprus is not yet fully operational. In this paper we examine the provisions of the Amending Law and their implications for the regulatory approach towards crypto-assets in this jurisdiction, and note certain points that any new market entrant, or existing provider might wish to consider. We will publish additional updates following the publication of any relevant Directives by CYSEC.
Read the full paper here.
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