Cyprus to regulate crypto exchanges under stringent laws
- The amendments require every crypto service provider to register with the country’s financial regulator.
- It also obliges crypto firms already registered with other European countries to register with the regulator.
Cyprus is going to amend its law around crypto asset firms operating in the country, as per a recent local media report.
Cyprus’s finance ministry is planning to amend the existing Prevention and Suppression of Money Laundering Law. The ministry has presented its set of amendments to the Parliamentary Committee on Legal Affairs.
It aims to align Cyprus with international standards for anti-money laundering and combating the financing of terrorism (AML/CFT) set by the Financial Action Task Force (FATF) and the recommendations of the MONEYVAL November 2022 report.
The amendments require that every service provider dealing with crypto assets must register with the country’s financial regulator, the Cyprus Securities and Exchange Commission (CySEC).
Crypto firms already registered with other European states also need to register with the CySEC. The Commission itself included this clause in the amendments.
In case of violation, the penalties range from fines of up to €350,000 to imprisonment of up to five years or a combination of both.
Cyprus, an EU member, tightens crypto rules ahead of MiCA
The Cyprus administration consulted the Cyprus Bar Association which voiced its concerns about the law’s scope. It specifically questioned the requirement for crypto firms already registered in other EU states to also register in Cyprus.
Notably, the bar association has proposed that the “Travel Rule” be incorporated into the law. Currently, the provision is not a part of Cyprus’ legislative framework.
The Finance Ministry promptly responded that the law is consistent with the single market functioning within the European Union (EU). They underline how CySEC holds authority over crypto firms providing services in Cyprus, regarding of their regulatory status in other EU states.
In November 2022, the European Union Blockchain Observatory & Forum published a report titled “EU Blockchain Ecosystem Developments.” The report said Cyprus, a member-state of the EU, had 48 blockchain companies.
Cryptocurrency is a taxable asset in the country. It taxes income from crypto trading at 12.5% under corporation tax. Cyprus is implementing these measures as the Markets in Crypto-Assets (MiCA) regulation gets implemented in the EU in 2024.