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- The proposal would mandate that CSPs, or crypto asset trading firms, register with CySEC.
- The Cyprus Bar Association has expressed concerns regarding the proposed amendment.
By imposing significant fines on unregistered crypto service providers (CSPs), Cyprus aims to enhance its regulation of the crypto sector. The government has put forward a modification to the “Prevention and Suppression of Money Laundering Law.”
This modification seeks to align Cyprus with the standards set by the Financial Action Task Force (FATF) and the recommendations outlined in the MONEYVAL report. The proposal would require CSPs, or crypto asset trading companies, to register with the Cyprus Securities and Exchange Commission (CySEC), the country’s financial regulatory body.
Severe penalties, including fines reaching €350,000 and imprisonment for up to five years, or both, may be enforced for non-compliance with this regulation.
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Stringent Penalties
The government has justified these penalties by stating they are essential measures to combat money laundering and the financing of terrorism, particularly in light of recent technological advancements. Cyprus is not the only country taking decisive action against unlicensed CSPs.
In Malta, individuals who violate cryptocurrency regulations may face fines of up to €15 million and imprisonment for as long as six years. Similar sanctions, including imprisonment and substantial fines, have been enacted in countries such as France and Ireland.
The Cyprus Bar Association has raised concerns about the proposed amendment. The organization has questioned the scope of the regulation, with members inquiring why CSPs already registered in other EU member states are required to register in Cyprus.
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