Chiming with the international clamor for heightened control, the Mediterranean island of Cyprus – historically a haven for cryptocurrencies, now plans to tighten enforcement within its crypto sphere. Echoing the tune of the Financial Action Task Force (FATF) and renewing its grip on the Prevention and Suppression of Money Laundering Law, Cyprus aims to align with the global standards for anti-money laundering and terrorism financing (AML/CFT).
The Cyprus Ministry of Finance has reportedly presented a package of amendments to the Parliamentary Committee on Legal Affairs. At the crux of their proposal: compelled registration of every crypto service provider with the national financial watchdog, the Cyprus Securities and Exchange Commission (CySEC). If adapters fail to comply, they risk financial penalties ranging up to €350,000, imprisonment for five years, or in some cases, a combination of both.
However, these proposed restrictions have not been met with unanimous support. Objections arose from the Cyprus Bar Association, expressing concerns over the amendment requiring crypto service providers already licensed outside of Cyprus to re-register with the CySEC, a clause proposed by the CySEC.
The increased regulation does not seem to have deterred crypto businesses from registering in Cyprus. Emphasizing this, the renowned trading platform, eToro secured a Crypto Asset Service Provider (CASP) registration from CySEC, close on the heels of preceding platforms like ByBit. However, the escalating regulatory pressure cast a different spell on arguably the world’s largest crypto exchange, Binance, which opted to discontinue its operations from Cyprus to focus on larger registered EU markets.
While it remains to be seen if these tighter regulations will invite more transparency or create a prohibitive environment, the island nation of Cyprus is set to take a pivotal stance in this inescapable conversation surrounding the regulation of the cryptocurrency landscape. It is a beguiling toss-up – achieving the due diligence required to prevent illicit activities without stifling the exponential growth of the innovative blockchain technologies.