- The proposal would require CSPs, or crypto asset dealing firms, to register with CySEC.
- The Cyprus Bar Association has voiced concerns about the proposed amendment.
By enforcing severe fines on unregistered crypto service providers (CSPs), Cyprus is working to strengthen its oversight of the crypto industry. The government has recommended a change to the “Prevention and Suppression of Money Laundering Law.”
The purpose of this change is to bring Cyprus in conformity with the standards established by the Financial Action Task Force (FATF) and the suggestions that were made in the MONEYVAL report. The proposal would require CSPs, or crypto asset dealing businesses, to register with the Cyprus Securities and Exchange Commission (CySEC), the nation’s financial authority.
Serious penalties, including fines of up to €350,000 and jail for up to five years, or both, may be imposed for failure to comply with this provision.
Stringent Penalties
The government has defended these punishments by claiming they are necessary measures to address money laundering and terrorist funding dangers, especially in light of recent technological developments. It is not only Cyprus that has taken strong action against unlicensed CSPs.
In addition to fines of up to €15 million, imprisonment of up to six years is possible for anyone who breaks Maltese cryptocurrency laws. Similar penalties, including imprisonment and hefty fines, have been implemented in nations including France and Ireland.
The Cyprus Bar Association has voiced concerns about the proposed amendment. Concerns have been raised by the organization over the breadth of the regulation, with members wondering why CSPs already registered in other EU member states need to register in Cyprus.
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