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How to submit a Crypto-Exchange CASP application to CySEC

Posted: Aug 09, 2022 10:44 Category: Blockchain , Crypto , Fintech , Posted by
Katy

SALVUS Funds is a boutique advisory firm based in Cyprus offering investment firms, funds, Electronic Money Institutions (EMI), and Crypto-Asset Services Providers (CASP) licensing, compliance, and internal audit services worldwide. Through SALVUS’ extensive experience in the investment services sector, they were the first-ever firm to submit a CASP application to CySEC.

The CySEC CASP regime

In 2021, the Cyprus Securities and Exchange Commission (CySEC) introduced the CASP registration regime. The CASP regime complies with the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) regulatory framework which enables the provision of crypto-asset services under the supervision of CySEC.

Since CySEC’s enactment of the CASP regime there is a high-demand in CASP applications from leading FinTechs around the globe. In part, this is due to the attractive incentives Cyprus offers business and foreign investors to set up their business on the island. Additionally, it is due to CySEC having the responsibility of supervising and regulating crypto-businesses, whereas other EU member states appoint AML and Financial Intelligence Units that work independently from their regulators.

Furthermore, the CASP regime offers different crypto-business models including:

  • Cryptocurrency exchanges – online marketplaces for buying and selling cryptocurrencies, altcoins, stablecoins, NFTs etc.
  • Crypto wallet business – managing, transferring, and safekeeping of crypto-assets.
  • ICO – initial offerings and/or sale of crypto-assets (covering a range of services)

Becoming a CASP

At the high-level, CySEC’s main priorities are to ensure investor protection and mitigate the risks of money laundering and terrorist financing (ML/TF). Hence, a successful CASP application must include several components; the Crypto-Assets team at SALVUS highlights some below:

  • Business plan
  • Initial capital adequacy requirements
  • Organisational structure
  • AML and risk management systems
  • Internal Operations Manual (IOM)

 

Moreover, the SALVUS Crypto-Assets team have learnt the following to be crucial in a successful CASP application:

  • Specific safeguarding procedures and disclosing the custodian crypto-assets wallet addresses,
  • Products and services are meticulously selected for operations and business model alignment,
  • AML Risk Assessment systems are presented in detail,
  • Robust Blockchain technology tools for KYT monitoring, crypto-wallet screening, and risk analysis procedures are provided, and
  • Visualising the CASP protocols and systems for mitigating risk with diagrams and flow charts.

 

Learn more about becoming a CASP.

 

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