On June 1, 2018, another central part of the regulatory reforms under the Control of Financial Services Law (Regulated Financial Services) will come in effect. This part addresses the activities of financial asset service providers.
The definition of a “financial asset service” encompasses all those activities that up until now were defined as “currency services” and were subject to mandatory registration as a currency service provider requirement, as well as additional financial services that had not required licensing up until now.
The expansion of the controls coming into effect June 1, 2018 is reflected in two key provisions of the law.
1) The inclusion of activities of financial asset management and safeguarding under mandatory licensing – In other words, a service that involves holding a financial asset for another party (whether permanently or temporarily) may be deemed to fall within the scope of the law and require a license as of June 1, 2018.
2) The inclusion of virtual currencies under the definition of “financial asset” – Thus, also those engaging in the field of cryptocurrencies and tokens may find themselves obligated to obtain a license as of June 1, 2018.
The interim provisions of the law prescribe that any party that registered as a currency service provider prior to June 1, 2018, or that engaged in an activity defined as a financial asset service that was not obligated to have a license up until now and applied for a license by June 1, 2018, will be eligible to be recognized as a “long-standing dealer” and may receive approval to continue operating its business until its license application is reviewed.
Those who are not eligible to be recognized as a “long-standing dealer” or fail to submit the license application by June 1, 2018, will be prohibited from providing financial asset services prior to the receipt of a license. Accordingly, we recommend checking as soon as possible whether your business constitutes a financial asset service according to the law. If so, you should file a suitable license application before June 1, 2018, especially if your business is already operating.