crypto asset regulation

Cyprus plans to implement the Markets in Crypto-Assets (MiCA) regulation by the end of this year or early 2025, aiming to protect investors and promote transformation in the crypto asset sector in the European Union. The MiCA framework, created by the European Commission, focuses on maintaining financial stability throughout the EU. Currently, there are no safeguards at the Union level for the crypto asset market, with only individual national legislation in place. The number of crypto-asset service providers increased from seven in 2022 to 11 by the end of that year, with a total of 16 applications pending so far this year. The Chairman of the Cyprus Securities and Exchange Commission (CySEC), Dr. George Theocharides, anticipates more CASP companies will emerge once MiCA is implemented. In 2023, CySEC conducted over 700 on-site and remote thematic inspections of supervised entities, assessed compliance with prudential supervision framework limits, and monitored Cypriot Investment Firms (CIFs) affected by Russia-Ukraine sanctions. CySEC also evaluated promotional material of over 35 CIFs, conducted investigations into CIFs, and imposed administrative sanctions totaling approximately EUR 2.2 million in 2023, with a total of EUR 6 million in administrative sanctions over the last three years. Additionally, 19 cases of CIFs had their operating licenses revoked or suspended. Dr. Theocharides highlighted the importance of the upcoming MiCA regulation for crypto-asset service providers, aimed at ensuring investor protection and market integrity. He urged investors to be cautious when investing in crypto-assets due to the associated risks. Despite challenges, the capital market in Cyprus remains of significant interest, with 82 entities receiving approval in 2023 and the number of supervised entities at 830 by the end of February 2024. CySEC also participated in events promoting financial literacy and issued warnings about entities posing as CySEC officials or imitating its website.