Cyprus SEC calls for the adoption of EU AML laws for crypto

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The Cyprus Securities and Exchanges Commission (CySEC) has proposed the transposition of the EU’s Fifth Anti-Money Laundering Directive (AMLD5) into national law.

With this, the regulator intends to bring the crypto industry in the country under the law. CySEC cited the ambiguity in local regulations as one of the key reasons for the proposal. Stakeholders in the crypto industry are not certain which laws apply to them, the regulator explained.

“Since launching the CySEC Innovation Hub, CySEC has been contacted by entities engaging in crypto-asset activities; a number of which do not appear to fall within the existing regulatory framework. As a consequence, CySEC considers the transposition of the parts of the AMLD5 concerning crypto asset activities, into national law, as appropriate,” the press release stated.

The EU’s AMLD5 is set to come into force on July 9 last year. However, member states have a grace period until January 2020 to implement the new rules into their local regulation. Some nations such as Finland have already begun implementing the new regulations. 

One of the main implications of the new regulation is that it will give a legal definition to cryptos. This will give cryptos a legally accepted identity and make it easier to identify currencies that the government doesn’t recognize.

CySEC intends to extend the scope of AMLD5 to include other aspects of the crypto market. In its accompanying consultation paper, it stated that this would help it protect the integrity of the market. The areas it will extend to include the exchange and transfer of cryptos. It will also apply to ‘the provision of financial services related to the sale of a crypto asset.’

The AMLD5 regulations have already started having an impact in the crypto industry. As we reported recently, LocalBitcoins has already announced that it will be making changes to comply with the new rules. Identity verification is the area that the new laws will affect the most. Users of the popular peer-to-peer platform will be required to identify themselves first before making large transactions.

With its latest push, CySEC is following up on the country’s push to position itself as a blockchain destination. In November last year, Invest Cyprus signed an MoU with the VeChain Foundation to partner in the development of the blockchain industry. Under the MoU, VeChain is to advise Invest Cyprus – the country’s national investment partner – on all matters related to blockchain technology.