The Cyprus Securities and Exchange Commission (CySEC) today published a Policy Statement on the Registration and Operations of Crypto Asset Services Providers (CASP).
“Crypto Asset Services Provider” or “CASP” means a person who provides or exercises one or more of the following services or activities:
- 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 over crypto-assets;
- Offering and/or sale of crypto-assets, including the initial offering; and
- Participation and/or provision of financial services regarding the distribution, offer and/or sale of crypto-assets, including the initial offering;
CASPs operating from Cyprus must be registered with CySEC in order to be able to provide services and/or perform activities in relation to crypto-assets and will be regulated by CySEC under the Cumulative CASP rules.
For the avoidance of doubt, where a CASP is established in another EEA Member State or in a Third Country, but provide services from Cyprus under any form and/or arrangement, will be operating from Cyprus in relation to the service and/or activities originating therefrom and will be subject to registration and supervision under the Cumulative CASP Rules.
As per the CySEC Directive on CASPs Registration, the prospective CASPs (the “Applicants”) must submit the relevant application form issued by CySEC for the registration in the CySEC CASP Register (the “CASP Application Form”), duly completed, which must inter alia include information in relation to:
- the name, trade name, legal form and legal entity identifier of the CASP;
- the physical address of the CASP;
- The services provided and/or the activities that the CASP may carry out;
- the website of the CASP;
- all public addresses of crypto-assets and/or of public keys/digital wallets controlled by the CASP that are used or can be used in the operation of the CASP in relation to each crypto-asset (the “Crypto-Assets Addresses”);
- The crypto-assets in relation to which they engage in any activity;
- Whether the CASP accepts other CASPs as customers or not;
- Whether or not the CASP offers business payment services in crypto- assets to vendors;
- Whether the CASP operates Crypto-Assets-ATMs, the number and the geographical location thereof;
- Whether the CASP is registered or supervised in any other jurisdiction;
- All documents and/or additional information specified in the CASP Application Form.
A limited number of investment firms (6) were permitted to provide crypto-assets’ activities on a limited scale in the past, as a non- regulated activity, in an effort to further inform CySEC’s view on crypto-assets.
As to these investment firms that were permitted to provide crypto-assets’ activities on a limited scale, as a non-regulated activity, CySEC believes that the extraordinary circumstances under which such operation were permitted under section 5(5)(b) of the Investment Services Law, are highly unlikely to still be relevant.
In addition to this and in view of an anticipated more widespread adoption of crypto-assets, CySEC believes that it is prudent to ring-fence the investment services from crypto-assets activities, at least until a certain level of maturity is reached, in order to avoid spill-over risks. To this end, these firms will have to formulate and submit to CySEC by the end of 2021 an action plan for phasing out their crypto-assets’ activities up until the end of 2022.
And if the respective group wishes so, to establish a different entity in order to seek registration as a CASP. In the meantime they will have to submit an application to be registered as CASPs.