The European Union’s (EU) proposed Markets in Crypto Assets (MiCA) is on the EU parliament agenda to be discussed on the 18th of April. If everything goes smoothly, MiCA regulation will be officially approved by the EU parliament on April 19th.

The MiCA regulatory package is pending for approval for some time now and faced multiple delays due to different opinions among the members of the EU parliament about the final legal text.

The legislation offers crypto companies such as wallets and exchanges a license for operating across the bloc in exchange for meeting governance and consumer-protection norms, and also introduces reserve requirements for stablecoins.

The Cyprus Securities and Exchange Commission (CySEC) on 14th of March released new guidelines on certain aspects of the compliance function requirements. These guidelines aim to ensure common, uniform, and consistent application of legal requirements related to compliance matters according to article 17(2) of the Investments Services and Activities and Regulated Markets Law (“the Law”) and Article 22 of the MiFID II Delegated Regulation 2017/565.

Check out the most recent details, provided in the official announcement of CySEC via the link below:
https://lnkd.in/eJQGnPbf

The Financial Action Task Force (FATF) is a global anti-money laundering watchdog that monitors and assesses countries’ efforts in combating money laundering and terrorism financing. Recently, on 24 February 2023, FATF added, among others, South Africa and Nigeria to its “grey list” of countries that do not meet the standards set by the organization. This development is significant, as South Africa and Nigeria are Africa’s two largest economies, and their inclusion in the grey list could have far-reaching implications for their financial systems.

Additionally, FATF removed Cambodia and Morocco from its grey list, citing significant progress in their efforts to improve their AML/CFT regimes. This demonstrates that countries can take concrete steps to address the issues identified by FATF. It also highlights the importance of collaboration between governments, financial institutions, and other stakeholders in the fight against money laundering and terrorism financing.

In conclusion, the inclusion of South Africa and Nigeria in FATF’s grey list highlights the need for these countries to strengthen their AML/CFT regimes to address the identified deficiencies. Lastly, find below the latest table with all the Jurisdictions that are on the “grey list” and the “black list”.

Please find below the relevant FATF link:

https://www.fatf-gafi.org/en/publications/High-risk-and-other-monitored-jurisdictions/Increased-monitoring-february-2023.html

On February 14, 2023, the European Council added Russia, the BVIs (British Virgin Islands), Costa Rica, and the Marshall Islands to its list of non-cooperative jurisdictions for tax purposes.

This move reflects concerns over these countries’ tax transparency and anti-money laundering practices, and it’s essential for businesses to review their portfolios and assess any exposure.

This development emphasizes the need to stay informed of regulatory changes and comply with anti-money laundering measures.

In continuation of Circular C537, CySEC issued Circular C539 which indicates that the CIFs that do not reach the materiality threshold of 50 retail clients (including clients treated as professionals on request), in each EEA country should inform the Commission accordingly. More specifically, the CIFs that do not reach the materiality threshold should submit by Friday, 27th of January 2023, the latest the Appendix included in Circular C539 by sending an email to riskstatistics.cifs@cysec.gov.cy.

A formal notice was published last Friday, January 6, by the Financial Services Authority (FSA) of Saint Vincent & the Grenadines (SVG) regarding a new set of requirements for Business Companies (BCs) and Limited Liability Companies (LLCs) engaging in FOREX business activities. The said notice provides for the following with immediate effect:

• Companies that wish to engage in FOREX activity need to provide a certified copy of the requisite licenses from the jurisdiction(s) where their business activities will be performed.
• Companies that are already registered in SVG and engage in FOREX activity will be provided 45 days (until March 10, 2023) to provide the FSA with a certified copy of the requisite licenses from the jurisdiction(s) where their business activities will be performed.

  The FSA notes that failure to follow these requirements will lead to sanctions against the mentioned type of companies.

The European Securities and Markets Authority (ESMA) published their latest newsletter for November 2022, #ESMA “Spotlight on Markets”, in which there is a reference on the opening statement of Steffen Kern (ESMA Head of Risk Analysis and Chief Economist), who described the implications of FTX collapse within the European Union (EU).

The analysis and observations within the opening statement have been conducted based on public information about the matter, as FTX was neither regulated nor supervised by ESMA and the latter do not have access to any particular information beyond what is publicly available.

While briefly summarizing the FTX case from a regulatory perspective, ESMA concluded in the following considerations:

1. Segregation of client assets is a crucial safeguard not only in traditional finance but in crypto markets as well. Back in 2018 and also the current year, ESMA issued relevant warnings about the risks involved in crypto-assets.
2. Crypto-assets experience huge volatility in prices due the risks involved in holding them such as market, liquidity and operation risks; ESMA explains that crypto-assets have raised concerns around the potential of ML/FT criminal activities, and market manipulation.
3. Lastly, the widespread and often aggressive marketing of crypto-assets to the mass market without disclosing the extreme risks involved may affect consumers’ judgement.

ESMA notes that FTX’s collapse amplify evidence that the crypto-assets market might have very weak corporate governance and controls.

Taking into consideration all the mentioned fundamental risks involved in crypto-assets markets, ESMA pointed out that its concerns around those risks were the basis of the rationale for the implementation of MiCA Regulation. The utmost matter of urgency for ESMA is the implementation of protections and rules around crypto-assets market so to achieve the protection of investors and market participants.

Our dedicated team at FiveComply is constantly updating in the matter to offer to you the latest updates in the legal framework. We can assist you with your queries; contact us for more information!

The Financial Services Commission (FSC), following the enactment of the Virtual Asset and Initial Token Offerings Services Act (“VAITOS Act”), and the guidance issued by the Financial Action Task Force (FATF) relating to Virtual Assets and Virtual Assets Service Providers, has deemed it necessary to clarify the regulatory stance that will be adopted with respect to Non-Fungible Tokens (NFTs).

To provide a brief overview, an NFT is a token recorded using distributed ledger technology (such as Blockchain), whereby each NFT recorded is distinguishable from any other NFT. This allows each NFT to be given unique features and to be associated with a distinct physical or virtual asset. NFTs are often linked to items such as artworks, music or videos.

The Guidance Notes issued on 30^th of November 2022 are to be read together with the Relevant Acts, and other guidelines and circulars issued by the FSC. Within the said Guidance Notes it has been stressed out that, NFTs may take different forms and therefore, warrant different regulatory treatments; thus, the FSC decided to differentiate into three (3) distinct Scenarios for each subcategory of NFTs.

Firstly, NFTs that are issued and marketed to the public as unique digital collectibles but they are not used for payment or investment purposes shall not be subject to the regulatory scope of the FSC, regarding the activities associated to them.

Secondly, some NFTs display characteristics of securities and therefore they shall be treated as such, according to FSC. For instance, fractional NFTS, which are assets that allow investors to invest in a particular NFT by owning only a fraction of it, can be considered as ‘securities’, as defined in the Securities Act. Therefore, FSC makes explicit that NFTs that are considered as ‘securities’, or constitute a share or an interest in a collective investment scheme must be regulated in accordance with its marketing and distribution practices to the general public. More precisely, regarding Virtual Asset Platforms that facilitate the sale and secondary trading of NFTs identified as ‘securities’, as per the definition of the Securities Act, targeting Mauritian residents or based in Mauritius, need to be licensed by the FSC as a securities exchange or securities trading system.

Last but not least, the third Scenario announced by FSC has to do with ‘other NFTs’, that are not part of the previous Scenarios mentioned above. For the issuance of NFTs which fall under the category of virtual assets and are neither unique digital collectibles, nor securities, the relevant persons shall apply for registration under section 24 of the VAITOS Act. In addition, persons that intend to transfer, exchange, hold and administer NFTs which fall under the category of virtual assets need to apply for the relevant licence in accordance with section 8 of the VAITOS Act.

Lastly, FSC notified investors who are not sufficiently knowledgeable in virtual assets to be cautious as there are various risks associated with NFTs including illiquid secondary markets, volatility, opaque pricing, hacking and fraud. Finally, FSC also mentioned that these Guidance Notes shall not be interpreted as legal, financial or other professional advice.

Our dedicated team at FiveComply is here to help you with the different types of crypto-licenses available and to provide you with the latest updates and developments.

The Financial Services Authority (FSA) has announced via the issuance of its Circular on the 5th of December 2022 that the deadline for the submission of the Bi-Annual Report on Consumer Protection will now be the 15th of July 2023 and not the 15th of January 2023 as was previously announced following the enactment of the Financial Consumer Protection Act (FCPA) on the 1st of May 2022.

The FSA further advised that guidelines as to the content of the report will be issued in the immediate future.

FiveComply’s team of experts can assist you in meeting your reporting obligations with the FSA Seychelles.