• Tue. Jun 25th, 2024

Register Or Go To Prison – Cyprus Warns Crypto Exchanges

Steve Kornacki

BySteve Kornacki

Oct 13, 2023

Cyprus has taken fresh steps to reinforce its cryptocurrency regulatory policy, warning Crypto Service Providers (CSPs) to register promptly or face severe penalties. This move reflects the nation’s commitment to aligning with global regulatory standards set by the Financial Action Task Force (FATF) regarding terrorism financing and money laundering.

Stringent Penalties For Non-Compliance

Under this modified regulation, Cyprus will impose strict penalties on CSPs that fail to register with the Cyprus Securities and Exchange Commission (CySEC), regardless of their registration status within other European Union (EU) states. This initiative is in response to a proposed legislative amendment to the “Prevention and Suppression of Money Laundering Law,” spearheaded by the Ministry of Finance.

Non-compliant CSPs could be subject to substantial fines of up to €350,000 or imprisonment of up to five years. This underscores the government’s determination to mitigate the risks associated with illicit activities and the financing of terrorism.

Following these stringent measures, concerns have been raised by the Cyprus Bar Association regarding the obligation for CSPs registered in other EU member states to register within Cyprus. However, the Finance Ministry asserts that the primary responsibility for overseeing such entities lies with the state of initial registration.

Meanwhile, Cyprus is considering the adoption of the “Travel Rule.” This rule would mandate CSPs to share customer information during transactions. This measure aims to bolster efforts to prevent illicit financial activities, including money laundering.

Europe: An Attractive Hub For Crypto Firms

Amid a crackdown on crypto firms by the United States, Europe, notably Cyprus, is emerging as an increasingly favored destination for these entities. For instance, eToro, a prominent platform for trading cryptocurrencies and stocks, has recently registered as a CSP with CySEC.

Reportedly, eToro has garnered EU approval to extend its Crypto Assets Service Provider offerings across all EU countries, aligning with a broader trend of crypto firms expanding into Europe.

Galaxy Digital and Ark Invest are other notable industry players in Cyprus. eToro’s CSP registration with CySEC positions it to thrive under Europe’s Market in Crypto-Assets (MiCA) legislation, set to take effect in July 2024.

Galaxy Digital, also eyeing Europe, seeks a more favorable regulatory environment, while Ark Invest aims to tap into the burgeoning European ETF market through its acquisition of Rize ETF Limited.

Significance Of MiCA Regulations

While Binance voiced concern over potential stablecoin delistings on Europe-based decentralized exchanges due to forthcoming MiCA regulations, CEO Changpeng Zhao clarified that the exchange will fully comply with these regulations once implemented. Meanwhile, Dr. Hedva Ber, eToro’s Deputy CEO, emphasized the significance of Europe for the platform.

She highlighted that most of their users are based in this region, adding that the firm is committed to providing European investors with direct access to a diverse range of crypto assets for a well-rounded portfolio. These developments indicate that Cyprus is taking significant strides towards establishing a well-regulated environment for cryptocurrency activities, positioning itself as an attractive hub for crypto-related entities across Europe.

Steve Kornacki

Steve Kornacki

Steve Kornacki, a respected author at Big Trends Signals, uses his deep online trading acumen to create comprehensive guides and balanced reviews, empowering traders in their digital pursuits.

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