Establishing a CASP in Cyprus in 2025

1. What is a CASP and what are the related services?

A MiCAR Crypto-Asset Service Provider (CASP) is defined as a person or entity that provides or exercises one or more of the following services or activities to or on behalf of another person:

• Providing custody and administration of crypto assets on behalf of clients
• Operation of a trading platform for crypto assets
• Exchange of crypto assets for funds
• Exchange of crypto assets for other crypto assets
• Execution of orders of crypto assets on behalf of clients
• Placing of crypto assets
• Reception and transmission of orders for crypto assets on behalf of clients
• Providing portfolio management of crypto assets
• Providing transfer services for crypto assets on behalf of clients

This framework mirrors investment services under the European MiFID (Markets in Financial Instruments Directive), governing traditional financial instruments.

As per Article 60 of MiCAR, Cyprus Investment Firms (CIFs) may also apply to CySEC to offer crypto-asset services. You may read more through the SALVUS article Offering Crypto-Asset Services Through Your CIF: Key Insights.

2. What is the governing legal framework?

The legal framework that governs CASP registration and operation in Cyprus consists of:

• Prevention and Suppression of Money Laundering and Terrorist Financing Law of 2007, Law 188(I)/2007, as amended by Law 98(I)/2023
• CySEC Directive for the prevention and suppression of money laundering and terrorist financing
• CySEC Directive for the register of crypto asset services providers
• Market in Crypto Assets Regulation (MiCA), as it gradually comes into force by the end of 2024

If you require additional information regarding your CASP’s registration or to discuss further your crypto-business needs, please contact us at info@salvusfunds.com ; our Crypto-Assets Licensing team is ready to answer your questions.

3. Why is registering a CASP with CySEC crucial?

Under the broader AML/CFT framework, CySEC defines which CASP entities fall under its supervision. This includes CASPs that:

• Are incorporated in the Republic of Cyprus,
• Are not incorporated in Cyprus but provide services or engage in activities on a professional basis from the Republic
• Are not incorporated in Cyprus but provide services or engage in activities on a professional basis to the Republic, unless they are registered in a Register of other Member States for services provided to the Republic

Failure to comply with the AML/CFT Law can result in strict penalties imposed by CySEC, including:

• Imprisonment for up to 5 years
• A fine for up to €350.000
• Both of the above

4. Registering a CASP with CySEC

Registering a CASP with CySEC requires a complete and well-documented application. The key requirements include:

• Submission of a business plan outlining:
  • Business objectives
  • Targeted customers
  • Governance arrangements
  • Financial projections
• Description of the organizational structure, ensuring compliance with MiCA’s requirements

• Proof of sufficient initial capital and own funds, categorized as three CASP classes:
  • Class 1 – 50,000 EUR
  • Class 2 – 125,000 EUR
  • Class 3 – 150,000 EUR
• Implementation of robust AML/CFT procedures, aligned with the specific risks associated with CASP operations
• Submission of an Internal Operations Manual, describing the policies and procedures the CASP must follow
• Disclosure of crypto asset public keys and wallet addresses, used for each crypto asset
• Documentation of IT systems, security policies, and fraud prevention measures, ensuring compliance with MiCA’s cybersecurity and operational resilience requirements

5. How can SALVUS assist your CASP registration?

We consider Cyprus as the most suited jurisdiction for the establishment of a CASP, and the CySEC CASP regime as the European regulatory regime most aligned with MiCA. This allows for CASP entities registered in Cyprus to benefit from a more favourable transition of a CySEC registration to a MiCA authorisation.

The Crypto-Assets Licensing team at SALVUS, through the successful registration of several CASPs under CySEC, has developed unparalleled first-hand experience on the policies and procedures required by the regulator for a CASP registration. This expertise is put to work, where we guide you in selecting the crypto-asset services most suited for your business model and objectives.

We employ a project management approach, to assist our clients in the collection of the required documentation and the completion of all the necessary application forms. Furthermore, our team acts on your behalf through the entire communication with the regulator, to ensure that all preconditions are fulfilled.

Once your registration is successfully approved, our Regulatory Compliance team takes over providing a wide range of post-registration services, to meet all your regulatory and reporting obligations.

If you require additional information regarding your CASP’s registration or to discuss further your crypto-business needs, please contact us at info@salvusfunds.com ; our Crypto-Assets Licensing team is ready to answer your questions.

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The information provided in this article is for general information purposes only. You should always seek professional advice suitable to your needs.