The Directive on the Register of Crypto asset Service Providers was released by CySEC, Cyprus’ securities regulator, on June 25th, 2021. The new Anti-Money Laundering Law 188(I)/2007 (“the Law”) gave CySEC the authority to adopt the Directive, and it did so on the same day that it entered into force.
A Crypto Asset Services Provider (CASP), also known as a “crypto accountant,” is an individual who provides services or advice related to cryptocurrency for their clients. These services and activities include any transfer between crypto-assets (i.e., digital currencies or tokens) and fiat currencies, as well as transfers among different types of crypto-assets that involve management by a company or individual. The ways in which the participation in and provision of financial services related to the distribution, offering, and sale of crypto assets, as well as permission to exercise control over them, are also included in the services that managed by CASP.
Registration’s primary requirements
CySEC is responsible for establishing a publicly accessible registry in which all companies must submit their basic information:
1. Legal form, and the legal entity identifier;
2. Address and the services provided and undertaken.
3. The activities in which a Crypto Asset Services Provider is permitted to engage under subparagraphs (a) through (e) of the definition of “Crypto Asset Services Provider” in section 2; and the services offered by such entity.
4. Website of the CASPs;
5. Any public addresses for crypto assets and any digital wallets maintained by CASP that are used or may be utilised to operate the service.
The digital assets they interact with in any way concerning:
Application Procedure
CySEC requires the applicant to provide it with all requested information and documents. New businesses must apply to register their operations in or from Cyprus before they can begin operating.
Any CASP established in the EEA and registered with the respective AML/CFT national supervisor must submit a notification to CySEC and provide evidence concerning their valid registration for each service or activity. If certain services or activities fall outside the scope of the framework that regulates their CASP registration for AML and CFT compliance, an application must be filed to register as a CASP with CySEC.
Our Fintech Corporate Law Firm took part in the 4th training seminar of the Technology Committee of the Cyprus Bar Association with the subject “Law & technology: Crypto-assets, Financial services and regulators” on July 28, 2022.
Capital sufficiency and own funds
The CASP should always keep its funds equivalent to the greater of:
a. The primary capital, as described below, or
b. A quarter (1/4) of the CASP’s fixed costs for the preceding year, as determined yearly.[KS1]
Fees and Subscriptions
The applicants must pay €10,000 upon submitting their application, which may not be refunded if rejected. The annual renewal fee for registration in the Register is €5,000.
The Commission will inform the applicant within six months, starting from the application submission date. As soon as the application for registration is officially approved, the applicant will be registered in the Register by CySEC.
Benefits for registration of CASP in Cyprus
Cyprus levies no taxes on non-tax residents’ dividends and capital gains, providing tax savings on the earnings produced from such transactions. It offers low start-up and maintenance costs, the opportunity to attract skilled workers who can support rapid business growth, and legal security for investors thanks to a standard legal system.
The Crypto-Assets team at Simon Zenios & Co LLC
We have a dedicated crypto-assets regulation and compliance team and welcome all your questions regarding CASP registration, crypto investment firms, or crypto investment funds.
Our Crypto-Assets team has led the discussion on cryptos regulation and our experience dealing with CySEC. This enables us to successfully register your business as a Crypto-Asset Services Provider (CASP) according to the rules stipulated by the relevant regulatory framework. These rules relate to the following:
- The fitness, reputation, and suitability of the CASP beneficiaries, directors, and employees.
- The numerous conditions for CASPs registration include the following:
- The organisational and operational requirements
- The capital and own funds requirements
- AML, KYC, KYT, and KYW requirements.
- Conducting client due diligence, including Know Your Client (KYC) procedures.
- Drawing the economic profile of clients.
- Identifying the source of client funds.
- Monitoring the clients’ transactions.
- Identifying and reporting suspicious transactions.
- Undertaking a comprehensive risk assessment concerning clients’ activities and taking reasonable measures per client, activity, and crypto asset.
The relevant regulatory framework includes the AML/CFT Law, the CySEC Directive for the Registry of crypto-asset service providers, and the CySEC Directive for the prevention and combating of money laundering and terrorist financing.
We help new and existing CASPs that provide services in or from Cyprus submit a fully completed application package that includes the following:
The application forms.
The relevant questionnaires.
And any additional information and required evidence.
We also help CASP established in the EEA and registered with the respective AML/CFT national supervisor about all crypto-asset services or activities undertaken or intended to be undertaken in Cyprus to submit the relevant notification form to CySEC.
For any queries regarding any aspect of CASP registration, as well as for those involved in crypto investment firms, crypto investment funds or any other legal matters under the sun our law firm, Simon Zenios & Co LLC, is dedicated to providing comprehensive assistance and support and we are always available. Whether you need assistance with the application process for CASP registration or require any other legal advice, our firm is here to help.
