- Cyprus is planning to impose heavy fines on unregistered crypto service providers.
- Any crypto firm without legal registration will be fined $350,000 and receive 5 years of jail for the individual behind the firm.
Financial market regulators around the world barely know what to do with cryptocurrency. It’s decentralized and self-regulatory. There are no rules that control the illegal activities happening via crypto.
Till now, official organizations have taken several hot and cold approaches to managing crypto. Some tried to introduce tax regulations, while others are still figuring out which category crypto belongs to.
In the same vein, Cyprus is taking strict action to regulate the crypto ecosystem and the crypto services provided. Current rules are quite favorable to crypto service providers but the recently proposed amendment is going to be trouble for service providers.
What Does The Cyprus Amendment Say?
The organization defined the new term ‘crypto service provider’ as anyone who assists people while doing crypto transactions, trading crypto, or even investing. This is all the entities, such as crypto investment firms, crypto trading firms, and advisors. To regulate these growing entities, the government is planning to impose penalties on unregistered crypto firms.
According to reports, any unregistered firm has to pay $350,000 as a fine, and the individual behind the firm may end up in jail for 5 years. This news became official when the country’s finance minister proposed an amendment to the Parliamentary Committee on Legal Affairs.
The Legal Affairs committee received a proposal for amendment to the ‘Prevention and Suppression of Money Laundering and Terrorist Financing Law’ by the finance minister. The amendment aims to align international standards for Anti-Money Laundering and Counter-Terrorism Finance (AML/CFT). Amendments follow guidelines set by the Financial Action Task Force (FATF).
To avoid legal conflict, Cryptographic Service Providers (CSPs) have to register themselves with the Cyprus Securities and Exchange Commission (CySEC). The ultimate goal of Crypus is to maintain and regulate the crypto market and service providers.
Not only Cyprus, but other European countries are also getting stricter regarding crypto regulations.
Cypru’s Crypto Rules
Previously, Cyprus passed rules and regulations that control the current crypto market. On November 25th, 2020, Cyprus regulatory bodies passed Circular C417 entitled “Prudential Treatment of Crypto Assets and Enhancement of Risk Management Procedures Associated With Crypto Assets.”
The circular defined the regulatory terms related to Cyprus Investment Firms ( CIFs). According to the circular, CIFs must follow these terms:
- Authorization from CySEC is a must for CIF. Without legal authorization, the firm will be considered illegal.
- CIFs should have sufficient balance to cover crypto investments.
- Lastly, CIF should manage the risk associated with cryptocurrency carefully.
All the rules are designed to regulate the crypto market and manage firms efficiently. As a result of these rules, the Cyprus government was trying to guide investment firms to manage risk efficiently.
But now the government is issuing a rule for unregistered firms. In simple words, it can be said that unregulated and unregistered entities operating in local markets are going to be banned. Anyone found guilty has to pay the fine and follow the rules according to the provisions.
Conclusion
Legal authorities in countries are trying to manage the crypto market efficiently. In the same vein, the Cyprus government is taking a strict approach to managing unregistered firms.