Cyprus Enhances Crypto Regulatory Framework to Align with FATF Guidelines

Cyprus, known for its crypto-friendly stance in Europe, is considering tightening its regulations within the industry. In fact, the Ministry of Finance in Cyprus is planning to amend the existing Prevention and Suppression of Money Laundering Law, as reported by Cointelegraph.

These proposed amendments have been presented to the Parliamentary Committee on Legal Affairs and aim to align Cyprus with international standards for anti-money laundering and the combatting of the financing of terrorism (AML/CFT), as established by the Financial Action Task Force (FATF), along with the recommendations outlined in the MONEYVAL report from November 2022.

Under these potential amendments, any entity providing services related to cryptocurrency assets would be required to register with the financial regulatory authority in Cyprus, the Cyprus Securities and Exchange Commission (CySEC).

Failure to comply 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 faced some reservations from the Cyprus Bar Association, particularly concerning the obligation for crypto service providers with operational licenses from other European countries to also register with CySEC. This provision was included in the amendments by CySEC itself.

It is worth noting that crypto companies have generally reported no significant obstacles when registering their businesses in Cyprus. In September, eToro, a crypto-friendly brokerage firm, received a Crypto Asset Service Provider (CASP) registration from CySEC, following in the footsteps of ByBit, which secured the same license in June. Nevertheless, Binance opted to withdraw from the Cyprus market in July amidst escalating regulatory pressures. The company stated its intention to concentrate on larger, registered EU markets.