Title: Cyprus Gears Up for Crypto-Asset Regulation with MiCA Implementation by 2025
In a significant move to bolster investor protection and promote a transformative shift in the crypto-asset sector across the European Union, Cyprus has announced its intention to implement the Markets in Crypto-Assets (MiCA) regulation by the end of 2024 or early 2025. This landmark framework, crafted by the European Commission, aims to establish financial stability throughout the EU community.
Currently, the crypto-asset market operates without Union-level safeguards, relying solely on individual national legislations. However, the sector is experiencing growth in Cyprus, with the number of crypto-asset service providers (CASP) increasing from seven in 2022 to eleven by the end of the year, and 16 applications pending so far this year.
Dr. George Theocharides, Chairman of the Cyprus Securities and Exchange Commission (CySEC), anticipates a surge in CASP companies once MiCA is in place. “An EU-wide regulatory framework does not exist today, thus there is no protection at present provided to investors,” he stated during a press conference.
CySEC’s supervisory work in 2023 has been extensive, with over 700 on-site and remote thematic inspections of supervised entities. These checks ensure compliance with prudential supervision limits and monitor Cypriot Investment Firms (CIFs) affected by Russia-Ukraine sanctions. CySEC also scrutinized promotional materials from over 35 CIFs, directing changes where misleading content was identified.
The Market Surveillance and Investigations Department conducted numerous investigations and referred one case to the Attorney General for potential criminal offenses. The Issuers Department assessed financial reports for compliance, and as a result of these audits, administrative sanctions totaling approximately EUR 2.2 million were imposed in 2023.
Looking ahead, Dr. Theocharides emphasized the importance of MiCA for crypto-asset service providers, ensuring investor protection and market integrity. He urged investors to exercise caution when investing in crypto-assets due to their complexity and high risk.
Despite challenges, the capital market in Cyprus remains attractive, with a 12% increase in supervised entities over the past four years. CySEC continues to promote financial literacy and education, actively participating in events and issuing warnings against fraudulent activities.
As Cyprus prepares for MiCA’s implementation, the sector is poised for evolution, with technology playing a pivotal role in shaping its future.
