Cyprus suspends FTX.com’s CIF license

abdelaziz Fathi

The Cyprus Securities and Exchange Commission (CySEC) has suspended the crypto exchange FTX.com’s CIF license, which allowed the insolvent platform to operate throughout Europe over the last few months.

According to media reports, the Cypriot chief regulator had asked FTX Europe to “suspend its operations and to proceed immediately with a number of actions for the protection of the investors”. The Cyprus branch, called FTX Europe, was among companies in FTX Group that filed for bankruptcy last week after the Sam Bankman-Fried-led exchange collapsed in dramatic fashion. The company, once valued at $32 billion earlier this year, said its crypto trading arm, Alameda Research, and US business, FTX.us, as well as 130 additional sister companies are part of the bankruptcy proceedings.

CySEC granted its authorization to FTX in September, allowing the exchange to launch its cryptocurrency service across the entire European Economic Area. The move comes even as the financial markets regulator is mulling over the need for additional rules on retail crypto trading.

The Cypriot licensing requires the firm to adhere to strict financial standards under the MiFID II framework, including the segregation and protection of client funds, full transparency of its business operations and capital adequacy controls.

Cyprus introduces regulatory framework for cryptos

The CySEC has been trying to increase oversight of cryptocurrencies and related assets by integrating EU anti-money-laundering rules into the Cypriot laws.

A policy statement issued in 2021 sets out detailed requirements for crypto firms seeking registration in the regulator’s CASP register. This register is publicly accessible and include information such as the crypto firm’s name, the legal form, its address and services.

The policy also introduced a definition for crypto assets that slightly extends beyond its traditional legal status.

Depending on their structure, the Cypriot regulator says crypto assets may qualify as financial instruments under the Investment Services and Activities and Regulated Markets Law. Additionally, while cryptocurrencies cannot be regarded as legal tender, they may qualify as “electronic money” or “e-money” in the sense of the Electronic-Money Directive.

Meanwhile, the CySEC went beyond the requirements set out in the fifth directive as it wants to bring new activities, which are not included in AMLD5, under the AML/CFT obligations.

 

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