People’s interest in crypto has skyrocketed with tremendous focus and attention shifting to Crypto Asset Service Providers (CASP). CySEC has issued the Directive on Crypto Assets Service Providers (CASP) Registry, which aims to provide an operational, regulatory framework for firms dealing with crypto assets.
The Directive classifies interested entities into three classes depending on the crypto asset activities provided and defines a capital requirement for each category:
Capital requirements for each class of CASPs are specified as follows:
- Class 1 – 50,000 EUR
- Class 2 – 125,000 EUR
- Class 3 – 150,000 EUR
Registering a Crypto Asset Service Provider (CASP) requires in-depth knowledge of the regulatory framework as well as anti-money laundering policies and procedures.
What is a CASP and what are the related services?
A Crypto Asset Service Provider is defined as a person who provides or exercises, one or more, of the following services or activities to another person or on behalf of another person:
- The exchange between crypto-assets and fiat currencies;
- Exchange between crypto-assets;
- Management, transfer, holding, and/or safekeeping, including custody of crypto-assets or cryptographic keys or means which allow the exercise of control on crypto-assets;
- Offering and/or sale of crypto-assets, including the initial offering;
- Participation and/or provision of financial services regarding the distribution, offer, and/or sale of crypto-assets, including the initial offering.
In this respect, the set of services relating to the distribution, offering and/or sale of crypto-assets consists of the following:
- Reception and transmission of orders;
- Execution of orders on behalf of clients;
- Dealing on own account;
- Portfolio management;
- Provision of investment advice;
- Underwriting and/or placing of crypto-assets with a firm commitment;
- Placing of crypto-assets without a firm commitment;
- 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.
Why is registering a CASP with CySEC crucial?
In the context of the broadened AML/CFT framework, the CASP entities that are subject to CySEC supervision are further defined including CASP entities that:
- are incorporated in the Republic of Cyprus,
- are not incorporated in Cyprus but provide services or engage in activities on a professional basis from the Republic,
- are not incorporated in Cyprus but provide services or engage in activities on a professional basis to the Republic, unless they are registered in a Register of other Member States for services provided to the Republic.
It is imperative for all CASP entities that are regulated by CySEC to comply with the provisions of the AML/CFT Law to avoid the National Competent Authority (NCA) penalties encompassing:
- Imprisonment for 5 years maximum, or
- A fine of €350.000 maximum, or
- Both of the above.
How can CX Financia help?
At CX Financia, we have the expertise to help you navigate through a dynamic and ever-changing regulatory landscape with continuous challenges.
Our full suite of services includes:
- Guidance and support with the EU 5th AML Directive and CASP registration process
- Full support in navigating within the regulatory environment with a dedicated Crypto asset team.
- Lifelong updates on existing and forthcoming policies and AML / CFT obligations in Cyprus.
- Consultation on structuring and managing your CASP to fuel growth and manage risks.
- Design bespoke AML / CFT frameworks to help you manage risks.
Our client base serves clients dealing with crypto assets worldwide.
To learn more about how we can fuel growth for your CASP through a transparent and compliant framework.