The Markets in Crypto Assets Regulation (MiCA) was approved by all EU member states last May and it is expected to be in full effect by the end of 2024, marking one of the first comprehensive regulatory frameworks for crypto assets in the world. The regulation represents an initial endeavour to harmonise the rules and establish a common framework within the EU market and the EEA economic area, under which crypto trading platforms, crypto related investment activities, traders and token issuers can be licensed and operate.<\/p>\n
Each member state is now required to make the necessary adjustments in local legislation and preparation before MiCA\u2019s full implementation. A primary and pivotal requirement under MiCA mandates that member states identify a formal authority where Crypto Asset Service Providers (CASPs) can seek licensing to operate. In Cyprus, the Cyprus Securities and Exchange Commission (CySec) is the designated national competent authority for CASPs to apply for and obtain licences to operate. CySeC will therefore supervise and regulate these entities under MiCA provisions and the Anti-Money Laundering and Counter Financial Terrorism (AML\/CFT) related laws and regulations.<\/p>\n
The recent amendments to the Anti-Money Laundering Law 188(I)2007 (hereinafter AML Law) in Cyprus define and cover CASPs in line with the MiCA framework. The law, will now be applicable to CASPs that fall into one of the below categories:<\/p>\n
(i)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 They have been established in the Republic of Cyprus;<\/p>\n
(ii)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 They have not been established in the Republic of Cyprus but operate and offer services through the Republic of Cyprus<\/p>\n
(iii)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 They have not been established in the Republic of Cyprus but operate and offer services to the Republic of Cyprus, unless they have been registered in another member state for the services they offer within the Republic of Cyprus<\/p>\n
CASPs falling into these categories must apply for licensing and register within CySec before commencing operations. The register being maintained is publicly available and can be found here:\u00a0Cyprus Securities and Exchange Commission | CASP REGISTER (cysec.gov.cy)<\/a><\/p>\n Another important amendment in the AML law is the imposition of penalties on CASPs failing to comply with the legislation. Those operating or offering services in the Republic without licensing or appearing in CySec\u2019s register can face up to 5 years of imprisonment, administrative fines of up to \u20ac350,000, or both.<\/p>\n Beyond the AML\/CFT Law, Cyprus\u2019 regulatory framework also includes:<\/p>\n The regulatory framework encompasses rules, pertaining to:<\/p>\n CySec categorise CASPs into three classes based on the crypto asset services they offer. Each class also has different initial capital requirements as shown below:<\/p>\n\n
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