In a move to align with global standards, Cyprus, known for its crypto-friendly environment, is set to tighten its crypto regulations. The Ministry of Finance has proposed amendments to the Prevention and Suppression of Money Laundering Law. According to a report by the Cyprus Mail, this signals a shift towards more stringent measures.
Alignment with International Standards
The proposed changes aim to bring Cyprus in line with the international standards for Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) established by the Financial Action Task Force (FATF). Additionally, the amendments consider the recommendations outlined in the MONEYVAL report from November 2022.
Mandatory Registration for Crypto Service Providers
Under the new regulations, every crypto service provider must register with the Cyprus Securities and Exchange Commission (CySEC). This requirement is a crucial step to enhance accountability and transparency within the industry.
Non-compliance with the registration could result in penalties ranging from fines up to €350,000 to imprisonment for up to five years. Also, it could be a combination of both.
Concerns and Discussions
The proposed amendments have sparked discussions, with the Cyprus Bar Association expressing reservations. A notable point of contention is the obligation for crypto service providers with existing licenses from other European countries to register with CySEC. This provision, introduced by CySEC, has raised concerns among industry stakeholders.
While some crypto companies have smoothly registered their businesses in Cyprus, there are varying responses. In September, eToro obtained a Crypto Asset Service Provider (CASP) registration from CySEC.
However, Binance, the world’s largest crypto exchange, opted to deregister from the Cyprus market in July. It further cited a strategic focus on larger registered EU markets.