CySEC Pushes to Bring Crypto Assets Under EU AML Rules

The Cyprus Securities and Exchange Commission (CySEC CySEC The Cyprus Securities and Exchange Commission (CySEC) is a financial regulatory authority of Cyprus. CySEC is one of the key watchdog authorities for brokerages in Europe, whose financial regulations and operations comply with the European MiFID financial harmonization law.Founded in 2001, CySEC is instrumental in providing licensing and registration for forex brokers and previously binary options providers.CySEC is responsible for a variety of different functions, which includes the supervision The Cyprus Securities and Exchange Commission (CySEC) is a financial regulatory authority of Cyprus. CySEC is one of the key watchdog authorities for brokerages in Europe, whose financial regulations and operations comply with the European MiFID financial harmonization law.Founded in 2001, CySEC is instrumental in providing licensing and registration for forex brokers and previously binary options providers.CySEC is responsible for a variety of different functions, which includes the supervision Read this Term) has revealed new details about its efforts to regulate crypto assets, hinting more discussions might already be underway. The CySEC wants to increase oversight of Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term and related assets by integrating EU anti-money-laundering rules into the Cypriot laws.

“CySEC has been contacted by entities engaging in crypto-asset activities; a number of which do not appear to fall within the existing regulatory framework. As a consequence, CySEC considers the transposition of the parts of the AMLD5 concerning crypto asset activities, into national law, as appropriate,” the watchdog said in a regulatory circular.

Derivatives referencing cryptoassets would not fall under this suggestion, but we understand they remain subject to ESMA's current restriction and any future proposals by the CySEC regarding the sale of these instruments to retail investors.

Published in June 2018, the AMLD5 is a pan-European anti-money laundering directive that member states will have until January 2020 to implement it into their national laws. The legislation is notable because it represents the EU’s first attempt to expressly regulate cryptocurrency activities at EU-level.

Under AMLD5, crypto exchanges and custodian wallet providers will be brought within the scope of EU anti-money laundering rules for the first time. The law imposes registration and customer due diligence requirements that force operators to disclose their traders' identities and report suspicious activity.

Crypto platforms face tighter AML rules

Meanwhile, the CySEC intends to go beyond the requirements set out in the fifth directive as it wants to bring new activities, which are not included in AMLD5, under the AML/CFT obligations. According to the regulator, these activities include:

1. a) exchange between crypto assets,
2. b) transfer of virtual assets and
3. c) participation in and provision of financial services related to an issuer’s offer and/or sale of a crypto asset.

As it stands, the current shifting regulatory landscape for cryptocurrencies across the globe is still very confusing as local regulators are struggling to keep pace with the innovations in the space.

Extending AML regulations to cryptocurrency activities is being considered in several countries around the world such as Australia and the UK, and already tracks the EU’s recent push to regulate Bitcoin.

But the really big challenge is the absence of coherent direction on cryptocurrency regulation as each country has its own approach. Some countries are welcoming, including Japan, while others are cautious, such as the US and Europe. And some nations like China are downright antagonistic.