The Cyprus Securities & Exchange Commission (CySEC) has revealed new details about its efforts to increase oversight of cryptocurrencies and related assets by integrating EU anti-money-laundering rules into Cyprus legislation.
CySEC released a regulatory circular stating that they had been contacted by entities engaging in crypto-asset activities and as a consequence is considering to implement parts of the fifth EU Anti-Money Laundering Directive (AMLD5) regarding crypto asset activities into national law, as appropriate.
Subsidiaries and other entities facilitating or referencing crypto currencies and other assets do not fall under the current recommendation, however understand the need to remain subject to ESMA’s current control and any future proposals by the watchdog regarding the sale or trading of such instruments to retail investors.
Member states have until January 2020 to implement the AMLD5 into their national laws. It is noteworthy here because it is a pan-European anti-money laundering directive that attempts to expressly regulate cryptocurrency activities for the first time at an EU-level.
For the first time, as per the 5th AMLD, crypto exchanges and guardian wallet providers will now be included within the scope of EU anti-money laundering regulations. The Directive imposes identification upon registration as part of KYC (know your client) and CDD (customer due diligence) requirements that mandate operators to disclose their traders’ identities and report any suspicious activity.
Meanwhile, CySEC proposes to go beyond the requirements set out in the fifth directive by bringing new activities, some of which are not included in the AML/CFT obligations. According to the regulator, these activities include:
a) Trading & exchanges between crypto assets.
b) The transferal of virtual currencies or other assets.
c) Activities alluding to the participation or provision of financial services related to the sale or facilitation of a crypto asset.
With all its varying regulations worldwide as jurisdictions around the world struggle to keep up with the current shifting regulatory landscape for the cryptocurrency market; many are still confused when it comes to cross border legislations as local regulators try to with the innovations in the rapidly moving space.
Cyprus is not the only one trying to get ahead of the game; rolling out more wide-ranging AML rules to cryptocurrency activities is being considered in several jurisdictions around the world such as Australia and the UK, and is already monitoring the EU’s recent drive to better regulate the Bitcoin market.
However the challenge remains, with an absence of coherent direction on regulating cryptocurrency trading as each jurisdiction has started making their own approaches. The attitude is widely different, with some jurisdictions like Japan who are welcoming the marketing, others such as the US and Europe remain with their guards up.