The Cyprus Securities and Exchange Commission (CySEC) has released new guidance aimed at Crypto-Asset Service Providers (CASPs) that are currently operating under transitional provisions related to the Markets in Crypto-Assets Regulation (MiCA). This update builds on an earlier announcement from October 2024.
CASPs that were already providing services in alignment with national regulations prior to December 30, 2024, are permitted to continue their operations for a transitional period. This duration extends until July 1, 2026, or until the CASP receives an authorization decision under the MiCA framework, depending on which event takes place first.
To qualify for this transitional phase, CASPs are required to provide documentation that proves they are operating in compliance with national laws before the specified cutoff date. This includes submitting a confirmation letter from the CASP’s Internal Auditor along with detailed information about their operational practices.
The information that CASPs must submit by January 10, 2025, includes a variety of data points: a list of services being offered, geographical distribution of clients, transaction volumes, the status of client funds and crypto-asset holdings, as well as revenue generated from these services.
CySEC has emphasized the importance of this data submission and has encouraged CASPs requiring additional clarification to reach out to its Authorisations Department. The intention behind these updated guidelines is to ensure that CASPs not only navigate this transitional period effectively but also comply with MiCA regulations as they await full regulatory approval.
Furthermore, the commission is now processing applications for CASP licenses under the incoming MiCA framework, which will be fully implemented for all members of the European Economic Area by December 30, 2024. This proactive move aims to facilitate a smooth transition to the MiCA regulations, which are considered a significant advancement in enhancing protections for investors within financial markets.
However, it is important to note that while applications will be prioritized for local entities, there is no guarantee that CASP licenses will be approved before the forthcoming EU deadline. This reflects the careful approach taken by the commission as it manages the regulatory framework surrounding crypto-assets during this time of legislative transition.
Overall, these developments signify a key transitional phase for CASPs and represent ongoing efforts to integrate these entities into a comprehensive regulatory structure, fortifying investor protection and ensuring compliance with the new regulatory landscape. As the date approaches for full implementation of MiCA, CASPs are encouraged to act swiftly and conform to the requirements laid down by CySEC to secure their operational status in this evolving market.