APPLY FOR A CASP LICENSE
CASPs in Cyprus
Following the transposition of the AMLD V into Cyprus Law which, brings into scope the crypto-asset service providers (“CASPs”), the CySEC, updated its definition of obliged entities under the Prevention and Suppression of Money Laundering Law 2007 and issued on the 25th of June, 2021, in regards to the registration and operating conditions of providers of services related to crypto assets.
Additionally, it is expected that the Markets in Crypto-Assets (MiCA) regulation, will come into force in 2024 across all EU member states, which aims to deliver uniform requirements concerning the authorization and governance of CASP. MiCA will enable CASPs to passport their services across the EU while simultaneously preventing regulatory fragmentation. In line with the Markets in Financial Instruments Directive (MiFID), MiCA’s provisions reference safeguarding measures for client’s crypto-assets, complaints, conflicts of interest handling procedures, outsourcing, et cetera.
In accordance with MiCA, CASPs will be subject to strong organizational requirements, particularly in ensuring that management and shareholder’s with over 20% ownership or voting rights are fit and proper, staff are adequately skilled and have the sufficient expertise, as well as that there are sound internal controls in place and risk assessment mechanisms to ensure the integrity and confidentiality of all information.
The application will be published by the CySEC, in due course, however generally the process is as below:
In order to apply to CySEC to become an investment firm, a company must be incorporated and have an LEI.
Preparation of the application file
Questionnaires and supporting documents are prepared in order to submit to CySEC. Applicants are expected to illustrate they are in a position to satisfy CySEC in relation to section 61E (6)(a) of the AML/CFT Law, which CASPs must comply with on an ongoing basis.
Submission of application file to CySEC
Once the application file is completed it is duly submitted to the CySEC together with sufficient policies and procedures including the complete Internal Operations Manual and AML Manual with the applicable CySEC Fees.
Correspondence with the CySEC with regards to the application file
A CySEC officer is appointed and then there are usually 2-4 rounds of questions from CySEC requesting clarification or further evidence with regards to the Application.
Following the rounds of questioning a conditional approval is provided by the CySEC, which once the company meets the conditions it submits proof of such to CySEC to proceed to next steps
CySEC activation visit
Following meeting the conditions of the approval, CySEC visits the offices to confirm substance and that the Company will run in line with Application.
Following CySEC approval the company will be added to the CASP register and can immediately start providing services
Application Timeline Estimates
Preparation of application and submission: 1 month (this timing depends on responsiveness of the client to provide the documentation required to be filed with the application)
Final CySEC decision on granting the license – the directive mentions 6 months, however this is solely dependent on and at the discretion of CySEC
Crypto Asset Service Provider Categories
CASPs who provide investment advice.
Initial capital €50,000.00
CASPs who provide the service mentioned in Category 1 and any of the below:
Reception and transmission of orders in relation to one or more financial instruments and/or
Execution of orders on behalf of clients and/or
Exchange between cryptocurrencies and banknotes and/or
Participation and/or provision of financial services on distribution, supply and/or sale of cryptocurrencies, including the initial offer and/or
Disposal of cryptocurrencies without commitment of withdrawal and/or
Initial capital €125,000.00
CASPs that provide any of the services mentioned in Category 1 or 2 and / or:
Management, transfer, retention, and/or safekeeping, including the custodianship, of cryptocurrencies or cryptographic keys or other means that allow control over cryptocurrencies and/or
Acceptance and/or disposal of cryptocurrencies with commitment of withdrawal and/or
Operation of a multilateral system in which the majority of the parties, interested in buying and selling crypto assets, may interact in a way that results in a transaction.
Initial capital €150,000.00
What Can FAI Comply do for Your Business?
We undertake the preparation and submitting of applications for CySEC CASP licensing and provide post-submission support leading up to the granting of the license, which authorises companies to provide investment services in accordance to applicable EU laws and regulations. Services include:
Consulting on services, and design of the CASP structure
Preparation of the Application File
Completion of the application form and checklists to be submitted to the regulator
With input from you, where required, preparation of the applicant’s:
Internal Operations and AML manuals according to EU regulations;
Assistance preparing shareholder, director and senior management questionnaires
Application follow-up during the process of assessment by the regulator
Assistance with recruitment and appointment of staff (extra service fee may be required)
There must be a minimum of 4 board members:
2 'independent' non-executive directors,
2 executive directors (4 eyes) should be Cyprus resident.
The majority of the board (at least 50% must be Cyprus residents).
Generally, heads of departments must be Cyprus residents.