Cyprus to Impose Penalties on Unregistered Crypto Service Providers
Cyprus is taking steps to enhance its regulation of the cryptocurrency sector by imposing harsh penalties on crypto service providers (CSPs) who operate without proper registration. The government has introduced a proposed amendment to the Prevention and Suppression of Money Laundering Law in order to align with international standards outlined by the Financial Action Task Force (FATF) and the recommendations in the MONEYVAL report.
Registration With Cysec Mandatory for CSPs
The proposed amendment states that CSPs, also known as crypto asset dealing companies, must register with the Cyprus Securities and Exchange Commission (CySEC), the country’s financial regulator. Failure to comply can result in fines up to €350,000 and imprisonment for a maximum of five years.
Cyprus Joins Other Countries in Implementing Stringent Measures
Cyprus is not alone in implementing strict regulations against unlicensed CSPs. Malta, France, and Ireland have all imposed penalties including imprisonment and substantial fines for similar offenses.
Cyprus Bar Association Raises Concerns
The Cyprus Bar Association has criticized the draft amendment, questioning why CSPs registered in other EU member states should also register in Cyprus. They have suggested including the “Travel Rule,” which requires CSPs to share customer and transaction information with each other and authorities.
Finance Ministry Responds
In response, the Finance Ministry stated that CySEC holds authority over CSPs providing services in Cyprus, regardless of their registration in other EU states. They assured that necessary modifications to existing legislation would enable the implementation of the “Travel Rule.”
Hot Take: Cyprus Cracks Down on Unregistered Crypto Service Providers
Cyprus is strengthening its regulation of the cryptocurrency sector by imposing penalties on crypto service providers who operate without proper registration. The proposed amendment aims to align with international standards and combat money laundering and terrorism financing risks. Failure to comply can result in significant fines and imprisonment.
The Cyprus Bar Association has raised concerns about the scope of the law and suggested including the “Travel Rule.” However, the Finance Ministry argues that CySEC has authority over CSPs in Cyprus, regardless of their registration in other EU states.
Overall, these measures demonstrate Cyprus’ commitment to ensuring a secure and compliant cryptocurrency industry within its borders.
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