Cyprus, known as one of the most accommodating European jurisdictions for cryptocurrency, may soon be tightening its regulations in the industry. As reported on October 10 by the Cyprus Mail, the Ministry of Finance in Cyprus is planning to make amendments to the existing Prevention and Suppression of Money Laundering Law.
The ministry has presented a package of amendments to the Parliamentary Committee on Legal Affairs. Their goal is to bring Cyprus in line with the international standards for anti-money laundering and combating the financing of terrorism (AML/CFT) established by the Financial Action Task Force (FATF) and the recommendations outlined in the MONEYVAL report from November 2022. According to these proposed amendments, all service providers dealing with crypto assets will be required to register with the country’s financial regulatory body, the Cyprus Securities and Exchange Commission (CySEC). Non-compliance with these regulations could result in penalties ranging from fines of up to €350,000 to imprisonment for up to five years, or a combination of both.
It’s worth noting that these amendments have raised concerns among the Cyprus Bar Association, particularly regarding the requirement for crypto service providers with existing licenses from other European countries to register with CySEC. This provision was introduced in the amendments by CySEC itself. However, crypto companies have not encountered significant difficulties in registering their businesses in Cyprus. In September, the crypto-friendly brokerage firm eToro obtained a Crypto Asset Service Provider (CASP) registration from CySEC, following in the footsteps of ByBit, which received the same license in June.
Meanwhile, the world’s largest cryptocurrency exchange, Binance, facing increasing regulatory scrutiny in recent months, made the decision to withdraw from the Cyprus market in June. The company stated its intention to concentrate its efforts on larger, registered EU markets.
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