Beyond adoption, CySEC hopes to expand on the directive’s anti-money laundering and counter-terrorist financing crypto regulations.
The Cyprus Securities and Exchange Commission (CySEC) published a press release and a corresponding consultation paper yesterday calling for the country to adopt and make into law the European Union’s (EU) fifth anti-money laundering directive (AMLD5). CySEC states in its release that it wishes to use parts of the AMLD5’s cryptocurrency regulations since a number of crypto-related activities happening within Cyprus do not fall under its existing legal framework.
AMDL5, which came into force in July 2018, set up new EU regulations for cryptocurrency exchanges and wallet providers that pushed back against money laundering and terrorist financing. To assist regulators in properly monitoring cryptocurrency usage, AMDL5 proposes that “Financial Intelligence Units (FIUs) should be able to obtain information” from crypto exchange and wallet providers in a way that allows them to “associate virtual currency addresses to the identity of the owner of virtual currency.”
In CySEC’s consultation paper, the regulatory authority finds that the adoption of AMDL5’s stance on crypto regulation will help curb the potential risk posed to Cyprus investors and also maintain the integrity of the country’s market. But CySEC doesn’t want to stop at simply making AMDL5 national law. The authority also plans to “extend the scope of the [anti-money laundering] Law beyond the provision of the AMDL5.” The regulatory body proposes using the directive as a base for the country’s own anti-money laundering and counter-terrorist financing laws, specifically regarding activities involving the exchange of cryptocurrencies, the 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.”
CySEC isn’t the first government authority to call for the adoption of the AMDL5 to strengthen crypto regulation. In January, the Cabinet, the executive arm of the government of Ireland, approved a bill that would implement AMDL5 in order to toughen existing crypto regulations regarding counter-terrorist financing efforts.
Cyprus also agreed to become part of the “Mediterranean seven” in December 2018. The group of seven countries work to lobby the EU to promote distributed ledger technology for industrial, commercial, and public service use cases.
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