The Cyprus Securities and Exchange Commission has launched a consultation on a proposed directive requiring crypto asset service providers to submit prudential and financial information.
This initiative follows CySEC’s previous consultation on proposed fees and reporting under MiCA. Consultations are open until 12 January 2026. Responses must indicate whether the submitter is an individual, company, or organizational group and must be submitted by email in Word format.
Under the draft directive, licensed CASPs will have to provide regular updates based on the EU MiCA regulation. You must also submit financial reports such as a trial balance, balance sheet, income statement, and audited annual financial statements. This reporting framework is consistent with existing prudential requirements for investment companies.
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Category 2 and 3 CASPs report quarterly, while Category 1 CASPs report annually. CASP must correct the data submitted within five months after the end of the fiscal year if the audit results differ.
Regulators review MiCA applications, stablecoins and props
CySEC Chairman Dr. George Theocalides said the regulator is monitoring the use of AI in investment firms and reviewing multiple MiCA applications without rushing approval. Crypto asset service providers such as Revolut and eToro undergo extensive testing before being licensed.
Stablecoins and prop trading continue to be an area of focus due to potential risks to financial stability. Theocarides also pointed out that investor deception continues despite regulatory measures. The agency monitors finfluencers and has issued guidance to ensure promotions comply with EU rules, emphasizing careful and gradual monitoring.
Cyprus businesses face stricter compliance requirements
Theocarides’ observation reflects the broader regulatory environment that Cypriot companies will face in 2025. CySEC is increasing its oversight of investment firms, funds, and crypto asset service providers. In 2024, regulators conducted more than 850 audits, imposed fines of 2.76 million euros and canceled several licenses.
Key EU regulations such as MiCA, AML Package, AIFMD II and DORA further enhance compliance and investor protection. Despite stricter monitoring, Cyprus’ financial sector is expanding, with 80 new entities licensed and companies actively seeking MiCA licenses under the evolving framework.
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