Updated: October 24, 2024
A Crypto Asset Service Provider (CASP) is a person who provides specific services regarding crypto assets to another person. These services can include exchanging crypto assets, exchanging crypto assets and fiat currencies, managing and safekeeping crypto assets, selling them, etc. Under section 2 of the relevant Cyprus law, a person can be natural (an individual) or legal (a company).
The relevant law is the Prevention and Suppression of Money Laundering and Terrorist Financing Law 188(I)/ 2007(AML/CFT Law).
On 17 October 2024, CySEC announced that it no longer accepts applications for registering new CASPs. This is done in anticipation of the new Markets in Crypto Assets (MiCA) Regulation (MiCA or MiCAR), which is coming into force in the EU. The MiCAR is expected to become fully effective on 30 December 2024.
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Under the AML/CFT Law, any Provider offering Crypto Asset Services must apply to the CASP Registry. This will register the provider with CySEC and give it a CASP license.
In Cyprus, the CASP registry is the Crypto Asset Service Provider registry introduced by the Cyprus Security & Exchange Commission (CySEC) in June 2021.
CySEC is also the regulator of the Market in the Crypto Assets industry in Cyprus (see below).
According to the AML/CFT Law, crypto assets are digital representations of value that are not issued or guaranteed by a central bank or public authority. They do not have to depend on a legally established currency and do not have the legal status of currency or money. They are, however, accepted by natural or legal persons as a means of exchange. Thus, they can be transferred, stored, and traded electronically.
Further, crypto assets are not:
Note that fiat currencies, or fiat money, is the money declared by the government to be the legal currency in a state: see the Encyclopedia Britannica: Fiat money.
According to the AML/CFT Law, a CASP may provide any and/or all of the Crypto Asset services listed below:
A provider should notify CySEC if:
Also, they must give sufficient evidence that they have a valid registration for each service or activity.
The Provider may be registered in another competent national authority within the EEA. Yet, this registration may not cover the services/ activities offered in Cyprus. In such a case, the Provider must apply for registration to the CASP Registry of CySEC.
Before any Crypto-Asset activity starts, new Providers must register with the CASP Registry of CySEC.
CySEC is the regulator of CASP operations. It has full authority to ensure that members follow the regulatory framework. For example, it can propose guidelines and policy statements for the activities of Crypto Asset Service Providers and/or the examination and authorization of applications to the CASP registry.
The CySEC regulatory framework rules include the following:
According to the CySEC Policy Statement, applications submitted to CySEC are examined on a first-come, first-served basis.
Any Crypto Asset Service Provider in Cyprus must have a minimum regulatory capital. The amount is set according to the Crypto Asset Service Provider Class in which the CASP will operate. The CASP must have this capital at the start of the licensing process and keep it throughout the licensed activity.
| CASP Class | Type of Crypto-Asset Activity | Initial Capital |
| Class 1 | CASPs that provide investment advice | Euro 50.000 |
| Class 2 | CASPs providing the service referred to in Class 1 and/or any of the following services: · reception and carrying forward 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 a firm commitment · portfolio management. | Euro 125.000 |
| Class 3 | CASPs that provide any of the services referred to in Class 1 or 2 and/or: · 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 a 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. | Euro 150.000 |
CySEC receives a registration fee for the examination and licensing of a CASP application. The fee is €10.000. It must be paid in full in one payment. Successful applicants will not have to pay an additional fee for the first year of registration.
The total fee to renew the Crypto Asset Service Provider license is €5.000 each year, paid to CySEC.
Our dedicated team of professional lawyers and financial advisors will happily provide services and advice regarding CASPs. We aim to deliver tailor-made solutions to ensure the success of your CASP application.
Due to the licensing process's specific nature, hiring experienced and professional consultants is crucial. When CySEC rejects an application, the appeal can take up to two years. In the meantime, the company’s shareholder(s) cannot operate anywhere within the EEA.
Our firm provides a complete service package for your CASP application in compliance with CySEC regulations and policies.
Our services include the following:
Our payment policy is as follows:
On 17 October 2024, CySEC announced that it no longer accepts applications for registering new CASPs. This is done in anticipation of the new Markets in Crypto Assets (MiCA) Regulation (MiCA or MiCAR), which is coming into force in the EU. The MiCAR is expected to become fully effective on 30 December 2024. As a result, CySEC has stopped accepting applications to register new CASPs.
Existing CASPs are given a period of transition. They can continue to operate until 1 July 2026 or until they get a license under the new regime, whichever comes first.
The MiCAR aims to set standard rules for regulating blockchain fintech applications in the EU and make EU financial services rules fit for the digital age. When fully implemented, MiCAR seeks to take the EU to the forefront of blockchain innovation.
The objectives of MiCA are:
MiCA will cover only crypto-assets that are not financial instruments, deposits, or structured deposits under EU financial services legislation. It will focus on asset-referenced tokens, e-money tokens, and other crypto assets. (In addition, it will regulate asset-referenced token issuers, e-money token issuers, and crypto-asset service providers.)
According to the European Commission, MiCA is expected to be adopted in the next two years. “By 2024, the EU should put in place a comprehensive framework enabling the uptake of distributed ledger technology (DLT) and crypto-assets in the financial sector. It should also address the risks associated with these technologies”.
Who supervises a crypto asset provider (CASP) in Cyprus?
The Cyprus Securities and Exchange Commission (CySEC) supervises CASPs in Cyprus.
What is a crypto asset management company?
Crypto-asset management is, according to Investopedia, “the practice of purchasing and selling digital assets to be used as investments while managing a portfolio to experience an overall growth in value”. In Cyprus, crypto-asset management is carried out by Crypto-Asset Service Providers (CASPs), defined by the law (188(I)/2007) as persons providing to another person or on behalf of another person services, including management, transferring and safekeeping of crypto assets, offering and or selling crypto assets, and exchanging between crypto assets. A CASP that provides services in or from Cyprus must register with CySEC (the Cyprus Securities and Exchange Commission).
What is the difference between CASP and VASP?
A VASP is a virtual asset service provider broadly defined (see, for example, blockchain compliance company 21 Analytics) as a business engaging in virtual asset activities. These include the exchange between virtual assets and fiat currencies (the legal currency of a state), the exchange between virtual assets, the safekeeping and administration of virtual assets and so on. For Elliptic, a provider of crypto compliance services, there is no difference between a CASP and a VASP, as they are similar terms used by different institutions. VASP is used, for example, by the intergovernmental organisation Financial Action Task Force, while CASP is the preferred term of the European Commission. Thus, VASP is mainly used outside the EU region. Nevertheless, there are differences in that the CASP, as defined by the Commission, may provide some wider services.
Is CASP a good tool?
To provide crypto asset services, an entity must register with CySEC as a CASP. This means the entity must satisfy several criteria, including organisational, AML and capital criteria (for instance, a minimum of EUR 15,000 capital if its activities will be only investment advice). The entity will be supervised by CySEC and comply with all relevant Cyprus and EU regulatory requirements. It is, therefore, a safe and efficient tool for crypto asset management.
Is crypto illegal in Cyprus?
No, crypto is not illegal in Cyprus. Any entity engaged in managing crypto assets must be registered with CySEC. The European Union has passed the Markets in Crypto Assets (MiCA) Regulation, which is expected to take effect in December 2024. MiCA covers crypto assets that are not currently included in financial services legislation. For details and a timeline of MiCA, see the European Securities and Markets Authority (ESMA) website.
Are crypto gains taxed in Cyprus?
As of October 2024, crypto gains are taxed as income for individuals and companies in Cyprus.
George K. Konstantinou
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