The Cyprus Securities and Exchange Commission (CySEC) has published a new policy\u00a0document, setting out the compliance requirements for crypto asset services providers (CASPs) for registration and operations.<\/p>\n
The regulator said that depending on the structure of the particular business concerned, digital currency assets will be regulated under either the Investment Services and Activities and Regulated Markets Law, or under the Electronic Money Law.<\/p>\n
The policy framework introduces a requirement for operators to tie in with AML\/CFT rules, which includes such processes as verifying the source of funds, monitoring transactions, and a host of other due diligence measures.<\/p>\n
The policy paper follows on from an announcement back in June from the securities regulator that it was to step up measures to regulate the digital currency market. By providing legitimate status to digital currency businesses operating in the country, Cyprus follows regional neighbors Malta and Gibraltar in creating a firmer legislative framework for digital currency businesses to operate.<\/p>\n
The measures have been widely viewed as an attempt by the authorities to push forward with plans to take blockchain technology to a more mainstream footing.<\/p>\n
However, CySEC highlighted a number of risks of integrating blockchain within the securities sector, including scalability, governance issues, interoperability with existing systems, and standardization.\u00a0<\/p>\n
Demetra Kalogerou, Chair of CySEC, said the policy direction would help encourage responsible innovation within the sector.<\/p>\n
\u201cOur proactive engagement with crypto businesses under the CySEC Innovation Hub, aiming to support innovative businesses and to engage with providers of emerging financial technologies, ensured that our expectations were clearly communicated to market participants well in advance and that the Cypriot framework has captured the industry\u2019s pace, alleviating the risks involved,\u201d Kalogerou said.\u00a0“Our work on financial innovation at national and EU level is ongoing, and we are determined to encourage responsible innovation, whilst ensuring the orderly functioning of the markets.\u201d<\/p>\n
Watch: CoinGeek Zurich panel, Blockchain Law & Policy <\/u><\/p>\n