5 minute read
Five Comply
by PaulGC
FiveComply
GABRIEL STYLLAS
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Founder & CEO of FiveComply
The Cyprus Securities and Exchange Commission (“CySEC”) on September 13th, 2021, issued a Policy Statement on the Registration and Operations of Crypto Asset Services Providers (“CASP”), where it outlines the registration requirements and provides additional information about how to register as a CASP.
Q When was the concept of Crypto Asset Service Provider (CASP) initially introduced in Cyprus?
The concept of Crypto Asset Services Providers was initially introduced in Cyprus with the transposition of the Fifth Anti-Money Laundering Directive into national legislation. The amended AML legislation was introduced on 25 June 2021 and regulates the digital registry of CASP. CySEC that is the financial regulator in Cyprus, will be regulating the operation and supervision of the crypto-registry.
Q Do crypto assets qualify as financial instruments?
Depending on their structure, crypto-assets may, inter alia:
i. Qualify as financial instruments under the Investment Services and Activities and Regulated Markets Law, transposing MiFID II (the “Investment Services Law);
ii. Qualify as Electronic Money under the Electronic Money Law, transposing EMD2 (the “E-Money Law”);
iii. Be a digital representation of value that is neither issued nor guaranteed by a central bank or a public authority. It is not necessarily attached to a legally established currency and does not possess a legal status of currency or money, but is accepted by natural or legal persons as a means of exchange and which can be transferred, stored, and traded electronically, and it does not qualify neither as fiat currency, nor as any of the instruments referred to in points (i) and (ii) above.
Q What should be the next steps of the crypto-asset providers?
CASPs that shall provide services in or from Cyprus must submit a duly completed application form, along with relevant questionnaires and any additional information and/or required evidence, in accordance with CySEC’s Announcements on the submission of applications and relevant correspondence, as amended from time to time and also pay the corresponding fee. In addition to the above, an electronic version of the application form (i.e. Form 188-01) should be also submitted at caspregistrations@cysec.gov.cy.
CASPs established in the EEA that are registered with one or more EEA National Competent Authorities for AML/CFT purposes in relation to all services or activities undertaken or intended to be undertaken in Cyprus, must submit a notification form at eeacasp@cysec.gov.cy.
Q When shall they register?
New businesses must register with CySEC before commencing their operations in or from Cyprus. Existing businesses that demonstrate a material existing crypto-asset activity will need to submit an application before the end of October 2021 and be fully compliant with the AML/CFT Law and the Directives issued pursuant to the AML/CFT Law.
Q What are the applicable CySEC fees?
CySEC registration charges are, as follows:
• €10.000 for the examination of an application.
Successful applicants will not be required to pay an additional fee for the first year of their registration. • €5.000 for the purposes of renewal of registration per year.
Q What are the requirements to apply for a crypto-asset licence?
Initially, to apply for the crypto-licence you need to have an entity incorporated in Cyprus and at least one fit and proper shareholder, as per the requirements of CySEC. In addition, four directors will be required; two of them acting as executive and two as non-executive directors. At least three of them must be Cyprus residents. CySEC will perform an assessment of their knowledge and experience in order to evaluate whether they satisfy the ‘fit and proper’ test. It is further required for the crypto-provider to have a fully operational office located in Cyprus where local resident staff members need to be hired on a full-time basis to fulfil the key functions of the company. There is a minimum number of personnel that needs to be hired, based on the type of licence selected.
The application to become a crypto-asset service provider is expected to take approximately 6 months and there are currently three types of licences based on different capital requirements; the €50.000, the €125,000 licence and the €150,000 licence.
Based on the €50.000 licence, the crypto provider can provide investment advice services. With the €150,000 licence, the crypto provider will be able to offer all the above along with (i) administration, transfer of ownership, transfer of site, holding, and/or safekeeping, including custody, of crypto-assets or cryptographic keys or means enabling control over crypto-assets; (j) underwriting and/or placement of crypto-assets with firm commitment; (k) operation of a multilateral system, which brings together multiple third-party buying and selling interests in crypto-assets in a way that results in a transaction.
We can see that CySEC has provided different options in order for each crypto-provider to be able to choose, according to his business model.
Q How can FiveComply team help potential applicants to acquire a crypto-licence?
Given the new CySEC policy and regulatory requirements for the acquisition of a crypto-licence, our team’s expertise and knowledge in the field can play a vital role in maximising efficiency, minimising administrative time & costs and yielding positive results with your CySEC application.
With the €125,000 licence, the crypto provider will be able to provide (a) Reception & Transmission of client orders; (b) Execution of orders on behalf of clients; (c) Exchange between crypto-assets and fiat currency; (d) Investment advice; (e) Exchange between cryptoassets; (g) Participation and/or provision of financial services related to the distribution, offering and/or sale of crypto-assets, including the initial offering; (h) Placement of crypto-assets without firm commitment; (i) portfolio management. Our team of experts, always works closely with FiveComply clients, in order to understand their business and develop a customised “application package”. We always aim to give priority to each client’s individuality and needs by providing tailored-made advice.
You can contact our team for a free consultation session on how to register with CySEC as a Crypto Asset Service Provider (CASP).
