News and developments
Cryptoassets in Cyprus - Under the ambit of the 5th AML Directive
The new Cyprus AML regulatory framework on cryptoassets paves the way for the upcoming Cyprus umbrella law on Distributed Ledgers Technology (“the DLT law”) and the EU Markets in Crypto-Assets Regulation (“the MiCA Regulation”) and is considered as a positive development for the establishment of Cyprus as a key-jurisdiction on cryptoassets related financial services and related technologies.
B. DEFINITION OF CRYPTOASSETS AND THEIR SERVICE PROVIDERS
The new AML Law defines cryptoassets as: “a digital representation of value that is not issued or guaranteed by a central bank or a public authority, is not necessarily attached to a legally established currency and does not possess a legal status of currency or money, but is accepted by persons as a means of exchange or investment and which can be transferred, stored or traded electronically and that is not, (a) Fiat currency, or (b) Electronic money, or (c) Financial instruments as defined in Part III of the First Appendix of the Law on the Provision of Investment Services and Activities and Regulated Markets”. In this respect, a cryptoasset service provider is defined as: “a person who provides or exercises one or more of the following services or activities to another person or on behalf of another person, which do not fall under the services or activities of the obliged entities mentioned in paragraphs (a) to (h) of article 2A: (a) Exchange between cryptoassets and fiat currencies; (b) Exchange between cryptoassets; (c) Management, transfer, holding and/or safekeeping, including custody, of cryptoassets or cryptographic keys or means which allow the exercise of control on cryptoassets; (d) Offering and/or sale of cryptoassets, including the initial offering; and (e) Participation and/or provision of financial services regarding the distribution, offer and/or sale of cryptoassets, including the initial offering” “Financial Services regarding the distribution, the offer and/or the sale of cryptoassets” means the following services and activities relating to cryptoassets:- Reception and transmission of orders;
- Execution of orders on behalf of clients;
- Dealing on own account;
- Portfolio management;
- Provision of investment advice;
- Underwriting and/or placing of cryptoassets on a firm commitment basis;
- Placing of cryptoassets without a firm commitment basis;
- Operation of a multilateral trading facility for buying and selling cryptoassets.