Cyprus freezes cryptocurrency applications ahead of EU-wide MiCA transition
The CySEC has alerted crypto asset service providers about upcoming changes as the continent prepares for MiCA. By December 30, the European Union will have transitioned from national crypto asset service provider (CASP) laws to common Markets in Crypto-Assets (MiCA) regulations. The Cyprus Securities and Exchange Commission (CySEC) is setting an example of this transition by freezing CASP applications and warning market players of upcoming changes.
Planning for a smooth transition
The CySEC would no longer accept CASP applications under Cypriote national laws beginning Oct. 17, the day of the announcement. CASPs that register under national laws by the December 30 deadline will be authorized to function in that jurisdiction until July 1, 2026, unless they are granted or denied authorization under MiCA Article 63 before then.
CASPs will be subject to the European Commission’s Regulatory Technical Standards and Implementing Technical Standards once MiCA regulations take effect. Those standards have not yet been published, but the CySEC has recommended interested parties to consult the Draft Technical Standards produced by the European Securities and Markets Authority (ESMA) in the meanwhile.
On October 30, the CySEC will no longer receive notices under its national laws from entities in the European Economic Area about their intentions to provide services in Cyprus. Entities that file a notification before then will be entitled to operate on the same terms as local entities until July 1, 2026.
A far-reaching transition
Cyprus-based firms may currently provide crypto asset services in the EU under one of three national regulations. The CySEC reminded them that they should also be researching the ESMA standards as they prepare to move to MiCA.
Other regulators have already expressed concerns.
In September, the Dutch Authority for Financial Markets announced that it was looking into potential market manipulation techniques ahead of the MiCA transition. Fraud of this nature would be easier to detect and ban under the new, more transparent standards.
ESMA has urged some changes to MiCA. It wants CASPs to undergo a cybersecurity audit and pass a thorough background check. The European Parliament passed the MiCA regulation in April 2023. MiCA regulations concerning stablecoins came into force on June 30.
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