CySEC aims to subject crypto-asset activities to AML law

Chris Hamblin

17 March 2019

Since opening its so-called 'innovation hub' on the British model, CySEC has received entreaties from firms that conduct crypto-asset activities, a number of which do not appear to be subject to its existing regulatory rules. As a consequence, CySEC considers the transposition of the parts of 'AMLD V' concerning crypto-asset activities into national law to be appropriate.

In this case CySEC wants to 'gold-plate' AMLD V in order to subject the following activities to Cyprus' AML obligations (which are not included in AMLD V):

exchange between crypto assets;
transfer of virtual assets, and
the participation in and provision of financial services related to an issuer’s offer and/or sale of a crypto asset.

In CySEC’s view, such an extension is necessary because it will offset the AML risks that emanate from crypto-asset activities in a more comprehensive manner.

Its recent consultative paper on the subject concerns firms that engage in:

exchange between crypto-assets and fiat currencies;
exchange between one or more forms of crypto assets;
transfer of crypto-assets;
custodial and/or administrative services related to crypto-assets, or instruments that give their owners control over such assets; and
participation in and provision of financial services related to an issuer’s offer and/or sale of a crypto asset.

In this context, 'to transfer' means to conduct a transaction on behalf of someone else that moves a crypto-asset from one crypto-asset address or account to another.

HNWs who purchase, hold or transfer crypto-assets, and wealth managers who do it for them, will all be affected.