February 26, 2019, | SQUARED DIRECT - On the 19th of February 2019, CySEC released a Consultation Paper proposing the amendment of the national AML Law in order to extend its application to the use of cryptocurrencies and assets (‘Crypto Assets’).
The proposed amendment emanated from the review conducted on market participants’ comments CySEC received through its Innovation Hub, whereas it was obvious that their activities did not appear to fall within the existing regulatory framework.
In particular, based on the comments received, CySEC’s view and the feeling is that such an amendment is deemed necessary and proportionate for addressing the AML risks related to the Crypto Assets activities, whereas the same view is also shared by ESMA and FATF.
CySEC crypto new AML law
Notwithstanding the above, CySEC also proposed to go beyond the AMLD5 requirements, bringing also the following additional activities under the AML/CFT obligations, not included in the AMLDD5:
- The exchange between Crypto Assets;
- Transfer of Virtual Assets; and
- Participation in a provision of financial services related to an issuer’s offers and/or sale of a Crypto Asset.
Head of Compliance at Squared Direct, Constantina Economidou believes that:
"I strongly believe that the market of Crypto Assets, with its huge variation in market valuation seen over the last few years, requires strong legislation to regulate it. CySEC is on the right path to laying down the regulatory ground required for Crypto Assets.
Nevertheless, and even if regulators from all over the world have shown great interest so far in this market, they are still facing difficulties in transposing current legislation in order, including Crypto Assets. The fast pace of this market plays a significant role in this.
So far, we have seen different approaches from regulators and even Crypto Assets being rejected in whole as a financial instrument, which concludes to even more confusion and lack of transparency. Regulators should evaluate the potential of Crypto Assets in current advanced financial systems, consider any potential AML/CFT risks and the best ways to combat them and figure out how investor protection can be ensured.
A unified approach is deemed necessary on all aspects of Crypto Assets embedding all the necessary rules into their existing legal framework in order for the market to evolve into a more transparent and safer environment for investors and consumers on an international level, given the nature of the financial instrument.
It is clear that the proposed amendments of CySEC in the national AML law, represent a component of a sweeping wave of international and European steps towards regulatory changes in relation to Crypto Assets, whereas, these are embraced and hoping for a unified regulation taking into consideration the protection of both consumers and investment firms."