Cyprus Suspends Crypto License Applications Ahead of MiCA Transition
Date: 2024-10-18 Author: Oliver Abernathy Categories: IN WORLD
In December 2024, the European Union will transition from national laws governing crypto service providers (CASPs) to common rules set out in the Markets in Cryptoassets Regulation (MiCA). The Cyprus Securities and Exchange Commission (CySEC) has already begun preparing for this transition by suspending applications for registration and notifying market participants of the upcoming changes.
Preparing for the Transition
CySEC has stopped accepting applications from CASPs operating under national laws, as announced on the same day, starting October 17. Companies that managed to register before December 30 will be able to continue operating under national laws until July 1, 2026. However, their activities may be extended or terminated under Article 63 of MiCA, depending on whether they receive authorization.
Once MiCA comes into force, CASPs will be required to comply with the European Regulatory Technical Standards and their implementing requirements. Until these standards are published, CySEC recommends that market participants monitor the draft standards published by the European Securities and Markets Authority (ESMA).
In addition, on October 30, CySEC will stop accepting notifications from EEA companies intending to provide crypto services in Cyprus under national rules. Those who submit such notifications before this date will be able to continue their activities until July 2026, on an equal basis with local companies.
A large-scale transition
Currently, Cypriot companies can provide crypto services in the EU under three different national laws. CySEC reminded them that they should actively study ESMA’s standards in order to successfully transition to the new MiCA regulatory regime.
Some regulators have already begun to express concerns about the upcoming transition. For example, the Dutch Financial Market Authority said in September that it was investigating cases of cryptoasset market manipulation. With the new MiCA legislation, which will increase transparency, such schemes will be easier to identify and prohibit.
ESMA has also proposed changes to MiCA, in particular, requiring CASPs to undergo cybersecurity audits and due diligence. The European Parliament approved MiCA in April 2023, and certain provisions concerning stablecoins have already entered into force on June 30.
