The European Union is set to consolidate cryptocurrency regulation under the new Markets in Crypto-Assets (MiCA) framework by December 30, replacing national laws concerning crypto asset service providers (CASPs). The Cyprus Securities and Exchange Commission (CySEC) exemplifies this significant shift as it ceases accepting CASP applications under national laws and prepares the market for upcoming regulatory changes.
CySEC’s Transition Plan
From October 17, the day the announcement was made, CySEC stopped accepting new CASP applications under the existing Cypriot regulations. CASPs registered under national laws by the December 30 deadline will be permitted to operate under those laws until July 1, 2026, unless they receive earlier authorization or refusal under MiCA Article 63.
With the MiCA regulations taking effect, CASPs will need to comply with the European Commission’s Regulatory Technical Standards (RTS) and Implementing Technical Standards (ITS). Although these standards are yet to be published, CySEC has directed stakeholders to consult the Draft Technical Standards provided by the European Securities and Markets Authority (ESMA) for guidance.
On October 30, CySEC will also cease accepting notifications from entities in the European Economic Area intending to offer services in Cyprus under its national rules. Those who notify before this cutoff will maintain operational parity with local entities until the 2026 transition deadline.
Preparatory Steps for Cyprus-Based Entities
Crypto asset service providers currently operating under one of three national laws in Cyprus are advised to familiarize themselves with ESMA’s standards in preparation for MiCA. This proactive approach is encouraged to ensure a seamless transition to the new regulatory landscape.
The transition has also sparked actions from other regulatory bodies. For example, the Dutch Authority for the Financial Markets revealed in September that it is probing potential market manipulations in anticipation of MiCA. The new framework promises enhanced transparency and explicit prohibitions against such frauds, making them easier to detect and address.
ESMA’s Recommendations for MiCA
ESMA has recommended additional requirements for CASPs, including mandatory cybersecurity audits and comprehensive background checks, to bolster the security and integrity of the sector. These recommendations came after the European Parliament officially passed the MiCA regulation in April 2023, with specific provisions for stablecoins being enforced starting June 30.
| Date | Event | Description |
|---|---|---|
| October 17, 2024 | CySEC stops accepting new CASP applications | Applications under national laws are halted. |
| October 30, 2024 | Deadline for EEA notifications to CySEC | Last date for EEA entities to notify service intentions. |
| December 30, 2024 | MiCA regulations take effect | EU-wide crypto regulations begin. |
| July 1, 2026 | End of operation under national laws | CASPs must fully comply with MiCA regulations. |
The upcoming implementation of MiCA represents a pivotal development in cryptocurrency regulation within the EU. Cyprus is leading by example, showing how national regulators are managing the transition away from country-specific laws towards a unified regulatory approach. This change aims to enhance market integrity, protect investors, and foster a safer and more robust digital asset environment across Europe.
Featured image credit: Usman Nadeem via Vecteezy
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