September 13, 2021, | AtoZ Markets-The Cyprus Securities Market Commission (CySEC) today released a detailed policy statement covering the registration process and operations of crypto-asset service providers (CASP).
Meanwhile, CySEC highlighted that, depending on the structure of the companies, crypto assets will be classified as:
- Financial instruments under the Law on Investment Services and Activities and Regulated Markets
- Electronic money under the Electronic Money Act
Crypto assets can be considered as a digital representation of value that is not issued or guaranteed by a central bank or a public authority. The latest regulatory framework will require cryptocurrency companies to align their businesses with AML / CFT regulations.
In addition, CySEC will also impose various obligations on companies such as:
- Organizational and operational requirements
- Elaboration of the economic profile of the clients
- Identifying the origin of client funds
- Transaction monitoring
CySEC and the Project to Legitimize Cryptocurrencies
CySEC has been working on the process of legitimizing crypto assets for some time. Last June it first issued a directive revealing its plan to register crypto service providers.
Likewise, other regulators in Malta and Gibraltar are also trying to give crypto-asset companies adequate status. This move can also be seen as a push to put distributed ledger technology (DLT) into the mainstream.
However, CySEC identified many risks of integrating DLT into securities markets. Among them, CySEC has said that he is concerned:
- The interoperability
- Standardization and adoption of the technology
- Governance issues and compliance with the existing regulatory framework
Also, the regulator stated that it will begin evaluating applications from existing or potential CASPs and has encouraged others to consult PS-01-2021.
Key Obligations and Expectations of CySEC
By the CySEC Directive on the CASP Registry, prospective CASPs (the “Applicants”) must submit the corresponding application form issued by CySEC for registration in the CySEC CASP Registry (the “CASP Application Form”), duly completed, which should include, among other things, information about:
1. The name, company name, legal form, an identifier of the legal entity of the CASP
2. The physical address of the CASP
3. The services provided and/or the activities that the CASP may perform as defined in subparagraphs (a) to (e), in the definition of “Cryptoactive Service Provider” in paragraph (1) of section 2 of the law
4. The CASP website
5. All public addresses of crypto-assets and/or public and/original wallets controlled by the CASP that are used or may be used in the operation of the CASP about each crypto asset (the “Cryptoassets Addresses”)
Also, the other requirements that must be met are:
- The crypto assets about those who participate in any activity
- Whether the CASP accepts other CASPs as clients or not
- Whether or not the CASP offers commercial payment services in crypto assets to providers
- If the CASP operates Crypto-Assets-ATMs, the number and the geographical location of the same
- If the CASP is registered or supervised in any other jurisdiction
- All documents and/or additional information specified in the CASP