Cyprus Tightens Crypto Regulations: Aligns With MiCA Framework, AML Standards

As the worldwide crypto sector grapples with increasing regulatory challenges, the Markets in Crypto-Assets (MiCA) offers a unified framework for EU nations to enhance user security and functionality. In line with several other EU nations, Cyprus has introduced regulations, imposing penalties for non-compliance.

What Happened: Crypto-friendly island country Cyprus intends to tighten industry regulations as the local Ministry of Finance plans to amend the existing Prevention and Suppression of Money Laundering Law, as reported by Cointelegraph. The ministry seeks to align Cyprus with international standards for anti-money laundering.

The amendments highlight that every crypto asset service provider should register itself with the financial regulator, the Cyprus Securities and Exchange Commission (CySEC). In case of non-compliance, they may face penalties of up to €350,000 to imprisonment of up to five years or a combination of both, according to Cointelegraph

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The Cyprus Bar Association has expressed reservations about the requirement for crypto service providers (CSPs), already licensed in other European nations, to register again with the CySEC.

Among the many companies registering their business in Cyprus, eToro received a Crypto Asset Service Provider (CASP) registration from the CySEC in September, while ByBit received the same in June. Contrarily, Binance de-registered from the Cyprus market in July as it looked to focus on larger registered EU markets.

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Why It Matters: In May 2023, EU member states approved the Markets in Crypto Assets (MiCA) regulation, the first-ever extensive set of cryptocurrency regulations. The rules are widespread from utility tokens to stablecoins, and applicable to all crypto-asset service providers.

It requires anyone who wishes to issue a crypto asset to obtain a license and imposes anti-money laundering requirements for service providers.

Among the other EU countries, Malta has also imposed imprisonment for up to six years and fines of up to €15 million for non-compliance with regulations, while Luxemburg has set fines of up to €5 million.

Belgium has imposed penalties ranging between €400,000 and €800,000 for non-licensed crypto businesses. France and Ireland also have similar stricter penalties and imprisonment for such offenses.

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