What is CySEC and what does it do?
The Cyprus Securities and Exchange Commission (CySEC) is the independent public authority responsible for the supervision of the investment services market, the collective investment and asset management sector, and the crypto-asset activities conducted in and out of the Republic of Cyprus. CySEC’s vision is to establish the Cyprus securities market as one of the safest, most reliable, and most attractive investment destinations.
CySEC serves as the national competent authority for Crypto-Asset Services Providers (CASP) that offer their services in or from Cyprus, in relation to Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT).
Why establish a Crypto-Asset Services Provider in Cyprus?
An established Crypto Asset Service Provider (CASP) in Cyprus benefits from:
Cyprus’s unique combination of memberships (e.g. European Union, Eurozone, Council of Europe, United Nations, World Bank, World Trade Organisation, International Monetary Fund, British Commonwealth).
Cyprus’s proximity to 3 continents.
Cyprus’s attractive tax regime is one of the lowest among the EU member states and includes more than 60 double tax treaties.
A cost-efficient plan of administrative, operating, and living expenses.
Crypto Asset Services
Crypto Asset Service Providers are able to operate through varying business models due to the different combinations of crypto-asset activities and services that can be generated, based on the company’s business plan and vision. CASP are categorised into three classes according to the crypto-asset services offered.
CASP Class Crypto Asset Services
Class 1 • Provision of investment advice
Class 2 • Provision of investment advice
And/or any of the below:
• Reception and transmission of client orders
• Execution of orders on behalf of clients
• Exchange between crypto assets and fiat currency
• Exchange between crypto assets
• Participation and/or provision of financial services related to the distribution, offering and/or sale of crypto assets, including the initial offering
• Placement of crypto assets without firm commitment
• Portfolio management
Class 3 • Provision of investment advice
And/or any of the below:
• Reception and transmission of client orders
• Execution of orders on behalf of clients
• Exchange between crypto assets and fiat currency
• Exchange between crypto assets
• Participation and/or provision of financial services related to the distribution, offering and/or sale of crypto assets, including the initial offering
• Placement of crypto assets without firm commitment
• Portfolio management
Plus any of the below:
• Administration, transfer of ownership, transfer of site, holding, and/or safekeeping, including custody, of crypto assets or cryptographic keys or means enabling control over crypto assets
• Underwriting and/or placement of crypto assets with firm commitment
• Operation of a multilateral system, which brings together multiple third-party buying and selling interests in crypto assets in a way that results in a transaction
Initial Capital Requirements
Initial capital requirements vary between the different CASP classes as per the table below.
CASP Class Initial Capital Requirements
Class 1 50,000 EUR
Class 2 125,000 EUR
Class 3 150,000 EUR
Applications Fees
Fees payable to the Cyprus Securities and Exchange Commission for the examination of the registration application are standard and independent of the services intended to be offered. The fee is 10,000 EUR. Where the application for the CASP registration is approved the CASP is not required to pay any additional fees to CySEC for the first year of its registration.
Annual Fees
Annual fees payable to the Cyprus Securities and Exchange Commission for the renewal of the CASP registration for a period of one year, are standard and independent of the services offered by the CASP. The applicable fee is 5,000 EUR from year 2 onwards.
CASP Notification
Crypto Asset Services Providers established in the European Economic Area (EEA) and registered with the respective national competent authority must submit a notification to CySEC of their intention to offer their services in Cyprus. Evidence is required regarding the valid registration of each service or activity. In case any of these services or activities are not prescribed by the framework governing the CASP registration for AML/CFT purposes, the CASP must proceed with the submission of a registration application to CySEC.
Licensing Timeframe
In our experience, the CASP registration procedure can be concluded in 12 months, in anticipation of CySEC’s varying workload and the applicant’s preparedness on reverting back with the information and documents requested.
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