The Cyprus Securities and Exchange Commission (CySEC) has extended the suspension of FTX.com’s CIF license, which allowed the insolvent platform to operate throughout Europe, until March 31.
According to a regulatory circular, FTX EU cannot provide any services or enter into a business relationship with any person and take on any new clients as long as the authorisation suspension is in force.
In addition, the firm is not allowed to execute any orders from clients for buying financial instruments or provide any investment services in or outside of Cyprus. Furthermore, the suspended brand is not permitted to advertise itself as an investment services provider or has relating advertisements. They must also close all open positions in relation to clients’ contracts on their maturity date or upon their request, as well as return any funds and profits.
Earlier in November, 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.
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.
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.
