Crypto-Asset Services Provider (CASP) – CySEC
What is CySEC and what does it do?
The Cyprus Securities and Exchange Commission (CySEC) is the independent public authority responsible for the supervision of the investment services market, the collective investment and asset management sector, and the crypto-asset activities conducted in and out of the Republic of Cyprus. CySEC’s vision is to establish the Cyprus securities market as one of the safest, most reliable, and most attractive investment destinations.
CySEC serves as the national competent authority for Crypto Asset Service Providers that offer their services in or from Cyprus, under the Markets in Crypto Asset (MiCA) Regulation.
Why establish a Crypto-Asset Services Provider in Cyprus under MiCA?
An established Crypto Asset Service Provider (CASP) in Cyprus benefits from:
- Cyprus’s unique combination of memberships (e.g. European Union, Eurozone, Council of Europe, United Nations, World Bank, World Trade Organisation, International Monetary Fund, British Commonwealth).
- Passporting its services to other EU member states under the Markets in Crypto Asset Regulation (MiCAR).
- Cyprus’s proximity to 3 continents.
- Cyprus’s attractive tax regime is one of the lowest among the EU member states and includes more than 60 double tax treaties.
- A cost-efficient plan of administrative, operating, and living expenses.
Crypto Asset Services
Crypto Asset Service Providers are able to operate through varying business models due to the different combinations of crypto-asset activities and services that can be generated, based on the company’s business plan and vision. CASP are categorised into three classes according to the crypto-asset services offered.
A CASP licensed from CySEC, allows a company to provide crypto services following the Markets in Crypto Asset Regulation (MiCAR), that allows you to passport one or more of the following crypto services to all EU Member States once approved;
| CASP Class | Crypto Asset Services |
|---|---|
| Class 1 | Crypto-asset service provider authorised for the following crypto-asset services: • execution of orders on behalf of clients; • placing of crypto-assets; • providing transfer services for crypto-assets on behalf of clients; • reception and transmission of orders for crypto-assets on behalf of clients; • providing advice on crypto-assets; and/or • providing portfolio management on crypto-assets |
| Class 2 | Crypto-asset service provider authorised for any crypto-asset services under Class 1 and: • providing custody and administration of crypto-assets on behalf of clients; • exchange of crypto-assets for funds; and/or • exchange of crypto-assets for other crypto-assets. |
| Class 3 | Crypto-asset service provider authorised for any crypto-asset services under Class 2 and: • operation of a trading platform for crypto-assets. |
Initial Capital Requirements
Initial capital requirements vary between the different CASP classes as per the table below.
| CASP Class | Initial Capital Requirements |
|---|---|
| Class 1 | 50,000 EUR |
| Class 2 | 125,000 EUR |
| Class 3 | 150,000 EUR |
Applications Fees
Fees payable to the Cyprus Securities and Exchange Commission for the examination of the registration application as showcased in the table below. Where the application for the CASP registration is approved the CASP is not required to pay any additional fees to CySEC for the first year of its registration.
| CASP Services | Application Fee |
|---|---|
| Providing custody and administration of crypto-assets on behalf of clients | 10,000 EUR |
| Operation of a trading platform for crypto-assets | 30,000 EUR |
| Exchange of crypto-assets for funds or for other crypto-assets | 5,000 EUR |
| Execution of orders for crypto-assets on behalf of clients | 8,000 EUR |
| Placing of crypto-assets | 8,000 EUR |
| Reception and transmission of orders for crypto-assets on behalf of clients | 8,000 EUR |
| Providing advice on crypto-assets | 8,000 EUR |
| Providing portfolio managements of crypto-assets | 8,000 EUR |
| Providing transfer services for crypto-assets on behalf of clients | 5,000 EUR |
It is clarified that in order for an end service to be delivered to clients, the provision of several of the abovementioned services might coexist. In such cases the fee payable should amount to the cumulative fee corresponding to each and every service.
Annual Supervision Fees
The annual supervision fee for CASP entities consists of a fixed component based on the services offered, and a variable component based on the financial turnover from crypto-asset services. The fee is payable within four months after the end of the CASP’s financial year.
Fixed Component – Annual Fee per Service Provided:
- Custody and administration of crypto-assets on behalf of clients: €10,000
- Operation of a trading platform for crypto-assets: €20,000
- Exchange of crypto-assets for funds: €5,000
- Exchange of crypto-assets for other crypto-assets: €5,000
- Execution of orders on behalf of clients: €5,000
- Placing of crypto-assets: €5,000
- Reception and transmission of orders on behalf of clients: €5,000
- Providing advice on crypto-assets: €8,000
- Providing portfolio management of crypto-assets: €8,000
- Providing transfer services for crypto-assets on behalf of clients: €5,000
The Variable Component applies only if the CASP’s annual financial turnover from crypto-asset services exceeds €500,000. It is noted that the annual supervisory fee is capped at €500,000.
CASP Notification
Crypto Asset Services Providers established in the European Economic Area (EEA) and registered with the respective national competent authority must submit a notification to CySEC of their intention to offer their services in Cyprus. Evidence is required regarding the valid registration of each service or activity. In case any of these services or activities are not prescribed by the framework governing the CASP registration for AML/CFT purposes, the CASP must proceed with the submission of a registration application to CySEC.
Licensing Timeframe
In our experience, the CASP registration procedure can be concluded in 12 months, in anticipation of CySEC’s varying workload and the applicant’s preparedness on reverting back with the information and documents requested.
Registering a CASP with SALVUS
The SALVUS Crypto-Assets Licensing team is comprised of industry-leading professionals able to support new and existing CASP that provide crypto asset services in or from Cyprus with their registration. We act on your behalf, throughout the entire registration process, by collecting all the necessary information, preparing a complete and well-supported application package and submitting it to CySEC.
Once your registration has been successfully completed, our Regulatory Compliance team is ready to work closely with you in achieving compliance with your regulatory obligations, by providing a wide range of post-registration services.
With in-depth expertise in MiCAR and other evolving European crypto regulations, we ensure our clients remain ahead of compliance requirements.
If you are interested in registering a Crypto-Asset Services Provider in Cyprus or submitting a notification form, please contact us at info@salvusfunds.com; our Crypto Assets Licensing team is ready to answer your questions.