Europe, as a continent, has the world’s second-largest shares in cryptocurrency. Cyprus, a European Union member, warmly welcomes and adopts the ever-growing expansion of the blockchain/crypto environment. Cyprus is also considered a good location for companies such as Fintech, offering crypto services.
Cyprus signed the “European Blockchain Partnership” and the “Declaration of the Southern Mediterranean Countries on Distributed Ledger Technologies.”
The Declaration of the Southern Mediterranean Countries on Distributed Ledger Technologies and The European Blockchain Partnership was agreed upon by seven European member states (Malta, Cyprus, France, Greece, Italy, Portugal, and Spain) and three non-European Union members countries (Norway, Ukraine, Liechtenstein) as they signed this declaration to build cross services between the countries, avoid fragmentation and to enhance the growth and expansion in digital services such as 5G, artificial intelligence, etc.
The Crypto Asset Services Providers (CASP) is regulated by Cyprus commission called Cyprus Securities and Exchange Commission (CYSEC). This body serves as the financial regulatory authority of Cyprus, overlooking the Cyprus Investment Firms. It approves and regulates the service providers by providing directives they must abide by. All Crypto Asset Services Providers in Cyprus are first approved by the CYSEC.
To be eligible to join the CASP, initial capital is needed. This capital depends on the services you intend to provide and the activities you want to perform.
Based on this, there are three classes of Crypto Asset Service Providers, as seen in the figure below.
Crypto-asset activities and initial capital:
CASP – Class 1
Type of crypto-asset activity – CASPs that provide investment advice
Initial Capital – €50.000
CASP – Class 2
Type of crypto-asset activity – CASPs providing the service referred to in Class 1 and/or any of the following services:
- reception and transmission of client orders
- execution of orders on behalf of clients
- exchange between crypto-assets and fiat currency
- exchange between crypto-assets
- participation and/or provision of financial services related to the distribution, offering and/or sale of crypto-assets, including the initial offering
- placement of crypto-assets without firm commitment
- portfolio management
Initial Capital – €125.000
CASP – Class 3
Type of crypto-asset activity – CASPs that provide any of the services referred to in Class 1 or 2 and/or:
- administration, transfer of ownership, transfer of site, holding, and/or safekeeping, including custody, of crypto-assets or cryptographic keys or means enabling control over crypto-assets
- underwriting and/or placement of crypto-assets with 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
Initial Capital – €150.000
Crypto Service Providers that must register as a Crypto Asset Service Provider in Cyprus are providers from Cyprus (whether they are providing services in Cyprus or not) and providers from the three non-European Union countries. Providers that are exempt from registering in Cyprus have registered in any of the six other European Union countries that signed the declaration. Therefore, they are allowed to work in Cyprus without re-registering, but the CYSEC must be notified.
How Can We Help
We offer different services to asset managers, firms, and companies who offer crypto services, such as IB, EMI, broker, etc., to those who are about to register and those we have already registered.
Our services are divided into two parts: pre-registration services and post-registration services. We offer sound and fully compliant strategies along the way relating to the application stage you are in with CYSEC.
Pre-registration Services
These include services such as forming a business plan based on the regulation of the CYSEC. Then, we develop your business plan and advise on the type of license required based on the business plan. Finally, after collecting the necessary documents, we will prepare and submit your licensing applications from start to finish.
We also provide other services such as Compliance and AML and assist with outsourcing the required third-party services such as recruiters, premises, employment, etc.
Post-registration Services
Our team of professionals offers these services after you have gotten your license; we evaluate systems, controls, policies, and procedures. In addition, we work together with you to identify and manage risk for internal control and other policies implemented and followed by relevant personnel.
We also offer post-registration services such as customer due diligence, KYC (know-your-customer) procedures, transaction monitoring, customer onboarding arrangements, and accounting services (including Payroll, tax compliance, and other ad hoc services).