On the 8^th of June, our Risk & Compliance Director, Evdokia Pitsillidou, was invited to represent SALVUS Funds and share our expertise at the iFX Expo 2022. The iFX Expo is a global B2B conference and is one of the most reputable and internationally recognised FinTech exhibitions. This year, the iFX Expo took place between the 7^th – 9^th of June at the Palais des Sport in Limassol, Cyprus, and featured world-class keynote speakers, insightful panel discussions, and networking parties.

The iFX Expo is known to attract some of the most exciting already-established as well as up-and-coming FinTech, RegTech, and tech firms. Due to the current landscape of the FinTech space, buzz words such as blockchain, crypto, NFT, payments, forex, and online trading, were the centre of attention and with good reason.

During this year’s edition of the iFX Expo, Evdokia shared the stage with a high-calibre of financial services professionals and explored “the dichotomy between relevance and compliance”. The panel discussion revolved around the latest regulatory developments around the globe.

We provide the highlights and learning outcomes below.

The CySEC Crypto-Asset Services Providers (CASP) regime was a key topic of the panel. The CySEC CASP registration regime was introduced in September 2021 and is considered one of the most robust crypto regimes in the EU at the moment. Our Risk & Compliance Director explained why the case is and how it compares to other crypto regimes in EU Member States such as Estonia and Lithuania.

Further, Evdokia shared our experience in submitting the first-ever CySEC CASP application in October 2021 and how the jurisdiction of Cyprus offers a more complete regulatory environment for CASP. In particular, regimes in Estonia and Lithuania offer supervision through national units only rather than through the National Competent Authority (NCA) such as CySEC in Cyprus for example.

Another hot topic for discussion was the implementation of new RegTech solutions within Cyprus Investment Firms (CIF), CySEC CASP supervised entities, and other regulated entities in Cyprus and abroad. There is a surge in demand for robust RegTech solutions that aim to mitigate money laundering and terrorist financing (ML/TF) and automate the Know Your Customer (KYC), Customer Due Diligence (CDD), and Anti-Money Laundering (AML) protocols during the client onboarding procedure.

However, since these RegTech solutions are only in their infant stages, regulation regarding their use is not yet available and this can pose a threat to any CIF, CASP or other regulated entity that opts in. The main reason is simply due to the lack of experience as no one really knows how the technology works. Although the purpose is to automate and accelerate KYC, CDD, and AML company protocols, they may in hindsight hinder the underlying issue they are trying to solve.

Hence, the biggest obstacle for both the regulators and service/product providers face is having a deep understanding of the impact such solutions create and how to combat them when they arise, because they will. It is also important to note that the ultimate responsibility for the outsourced service RegTech solution, falls solely with the regulated entity and not the RegTech service provider. Even though there is uncertainty around these types of new solutions, CySEC and other regulators are encouraging their implementation, and forward strides to a more complete and secure financial ecosystem are being made.

Lastly, the panel shifted their discussion to other areas of new regulation in the EU that brokers should be aware of. Furthermore, there are 4 critical areas where we can expect additional developments:

• Best Execution – revised RTS 27 guidelines are foreseen under the European MiFID II regulatory framework to further enhance investor protection and the smooth operation of the market.
• Market abuse – further guidance on Market Abuse Regulation (MAR) due to hefty fines over the past year.
• AML – the Anti-Money Laundering Directive 6 (AMLD 6) is prominent, and we can also expect the founding of the AML Authority at the EU level in 2024.
• Crypto – EU passporting of crypto providers under the Markets in Crypto-Assets (MiCA) regulatory framework is expected during this year.

In conclusion, we would like to thank the iFX Expo for the invitation to their 2022 European edition of the conference and congratulations to everyone who made it possible.

Please contact us at info@salvusfunds.com or call us at +357 7000 7898 if you would like more information.

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