• Wed. Jun 22nd, 2022

CySEC Releases Guidance Document on Digital Currency Regulation

The Cyprus Securities and Exchange Commission (CySEC) has released a new policy document, outlining the compliance requirements for crypto asset service providers (CASPs) for registration and operations.

The regulator said that depending on the structure of the business concerned, digital currency assets will be regulated either by the Law on Investment Services and Activities and Regulated Markets or by the Law on Electronic Money.

The policy framework introduces a requirement for operators to comply with AML / CFT rules, which includes processes such as verifying the source of funds, monitoring transactions and a host of other due diligence measures.

The guidance document follows an announcement in June by the securities regulator that it should step up action to regulate the digital currency market. By granting legitimate status to digital currency businesses operating in the country, Cyprus follows its regional neighbors, Malta and Gibraltar, in creating a stronger legislative framework for the operation of digital currency businesses.

The measures were widely seen as an attempt by authorities to push forward plans to make blockchain technology a more mainstream base.

However, CySEC has highlighted a number of risks associated with integrating blockchain into the securities industry, including scalability, governance issues, interoperability with existing systems, and standardization.

Demetra Kalogerou, President of CySEC, said the policy guidance would help encourage responsible innovation within the sector.

“Our proactive engagement with crypto companies as part of the CySEC Innovation Center, aimed at supporting innovative companies and engaging with emerging FinTech providers, ensured that our expectations were clearly communicated to market players. well in advance and that the Cypriot framework has captured the expectations of the industry. pace, mitigating the risks involved, ”Kalogerou said. “Our work on financial innovation at national and European level is ongoing, and we are determined to encourage responsible innovation, while ensuring the proper functioning of markets.”

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