Treppides & Co Ltd – Cryptocurrencies: investment companies trading cryptocurrencies. Authorization required.

CIF, cryptocurrencies and regulations

By Stelios Yiannaki

Senior Manager

Treppides & Cie Ltée

What is Cryptocurrency Trading?

Cryptocurrencies have taken the world by surprise in recent years and have turned into an absolute trend in the virtual investment world. Countries have been caught off guard to fully understand the essence of cryptocurrencies and impose regulations on this kind of digital assets.

Cryptocurrency trading by investment firms in Cyprus falls into two categories with a different set of regulations.

The first type of cryptocurrency trading comes in the form of contracts for differences (CFDs), derivatives, where the underlying asset of the transaction is cryptocurrency. This type of trading can be carried out by Cyprus Investment Firms (CIF), as MiFID II classifies them as financial instruments, with specific authorization from the Cyprus Securities and Exchange Commission (CySEC). CIF trading under this regime must comply with the rules of the law on investment services and activities and regulated markets.

The second type of cryptocurrency trading is in the form where transactions relate to actual cryptocurrency where they can be transferred and exchanged electronically.


Investment firms and crypto assets

Prior to the introduction of CASP regulations by CySEC, CIFs were exceptionally permitted under Section 5(5)(b) of the Investment Services Act to engage in crypto-asset activities as an unregulated activity.

Following the implementation of the AML/CFT Act, CySEC requested those CIFs, authorized to act on this status, to prepare a phase-out plan to divest from crypto-asset business by the end of 2022 and stipulate their intention to create a separate entity to register as a PSAP.

CySEC strongly encourages and supports the creation of a separate entity to operate as a CASP to protect the investment business industry from the risks associated with the world of crypto assets and the unpredictability involved in such transactions. While CIFs intend to play a dual role with crypto asset business, this CySEC authorization will only be granted in exceptional cases and on condition that it is necessary to support the investment services position.

Existing Crypto Asset Companies

Existing crypto assets were required to go through the CASP application process by October 2021. CySEC does not intend to oppose crypto asset firms that have continued their activities on this basis, especially when crypto asset activities were a necessary and material part of their operations before. application of the AML/CFT Law.

Application required for CASP activities

CIF’s application for the CASP registry using the CASP application form will be conducted through a more streamlined approach by CySEC, as certain assessments, such as for ultimate beneficial owners (UBOs), management team and positions will not need to be reassessed. Nevertheless, all applications will be subject to careful scrutiny in order to protect the investment business sector.

Treppides & Co Ltd is the largest independent consultancy firm in Cyprus with an established international presence and offices in Great Britain and Malta. Today, the company employs around 200 professionals. It offers a full range of advisory, tax and accounting services to groups, companies and investors operating internationally in a variety of financial and commercial sectors. The firm, which began operations in 1985, has 36 years of expertise and an elite team of experienced executives who can guide and assist investors and companies during the establishment process and subsequent investment activities. Cyprus and abroad.

Contact details:

Stelios Yannaki

[email protected]

Nicosia: Treppides Tower, Kafkasou 9, Aglantzia, CY 2112, Nicosia, Cyprus

Limassol: Andrea Kariolou 38, Ayios Athanasios, CY 4102, Limassol, Cyprus

London:7 Milner Street, London SW3 2QA

Malta: Level 1, Somnium, Tower Road, Swatar, Birkirkara BKR 4012