The Cyprus Securities and Exchange Commission (CySEC) is calling for the transposition of the European Union (EU)'s Fifth Anti-Money Laundering (AML) Directive (AMLD5) into national law — bringing local regulation of cryptocurrencies under its provisions.
With this, the regulator intends to bring the crypto industry in the country under the law. CySEC cited the ambiguity in local regulations as one of the key reasons for the proposal. Stakeholders in the crypto industry are not certain which laws apply to them, the regulator explained.
"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.
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"
Тhe EU directive, which came into force on July 9, 2018, sets a new legal framework for European financial regulators to monitor crypto-related businesses and service providers in order to protect against money laundering and terrorism financing.
Specifically, the directive extends the scope of regulatory oversight to crypto exchanges and wallet providers, enforcing stricter transparency requirements directed at anonymous payments — whether made via exchanges or prepaid cards. EU member states must incorporate the directive into their respective national laws by Jan. 20, 2020.
CySEC intends to extend the scope of AMLD5 to include other aspects of the crypto market. In its accompanying consultation paper, it stated that this would help it protect the integrity of the market. The areas it will extend to include the exchange and transfer of cryptos. It will also apply to "the provision of financial services related to the sale of a crypto asset."
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
In the past, the International Monetary Fund (IMF) raised concerns about the possibility of Malta's financial system being used for money laundering and financing of terrorism with the significant risks imposed by the growth of the local crypto-friendly industry.
With its latest push, CySEC is following up on the country's push to position itself as a blockchain destination. In November last year, Invest Cyprus signed an MoU with the VeChain Foundation to partner in the development of the blockchain industry.