The European Union is set to undergo a significant shift in regulations for crypto asset service providers (CASPs) as it transitions from national laws to common Markets in Crypto-Assets (MiCA) regulations by December 30. The Cyprus Securities and Exchange Commission (CySEC) is leading the way in this transition by freezing CASP applications and warning market participants about the upcoming changes.
In an effort to ensure a seamless transition, the CySEC will no longer accept CASP applications under Cypriote national laws starting from October 17, the day of the announcement. CASPs that successfully register under the national laws before the December 30 deadline will be allowed to operate under that jurisdiction until July 1, 2026, unless they are granted or refused authorization under MiCA Article 63 prior to that date.
Once MiCA regulations come into effect, CASPs will be subject to the European Commission’s Regulatory Technical Standards and the Implementing Technical Standards. While these standards have not been published yet, the CySEC has advised interested parties to refer to the Draft Technical Standards issued by the European Securities and Markets Authority (ESMA) in the meantime.
Starting from October 30, the CySEC will stop accepting notifications under its national rules from entities in the European Economic Area regarding their intentions to provide services in Cyprus. Entities that submit a notification before this date will be able to operate under the same conditions as local entities until July 1, 2026.
Cyprus-based entities currently have the option to offer crypto asset services in the EU under three different national laws. The CySEC has reminded them that they should also familiarize themselves with the ESMA standards in preparation for the transition to MiCA.
Other regulators have already expressed concerns about the transition. The Dutch Authority for the Financial Markets, for example, has been investigating potential market manipulation schemes before the shift to MiCA. The new regulations aim to make such fraud easier to detect and explicitly prohibit it.
ESMA has also called for some changes to MiCA, including a cybersecurity audit and a comprehensive background check for CASPs. The MiCA regulation was passed by the European Parliament in April 2023, and regulations specifically addressing stablecoins came into force on June 30.
Source: Cyprus Securities and Exchange Commission
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