The European Union has set a deadline of December 30 for the transition from national laws governing crypto asset service providers (CASPs) to common Markets in Crypto-Assets (MiCA) regulations. The Cyprus Securities and Exchange Commission (CySEC) is leading the way in this transition by freezing CASP applications and informing market participants of the upcoming changes.
To ensure a smooth transition, the CySEC will no longer accept CASP applications under Cypriot 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 able to operate under that jurisdiction until July 1, 2026, unless they receive authorization or refusal under MiCA Article 63 before then.
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 advises interested parties to refer to the Draft Technical Standards issued by the European Securities and Markets Authority (ESMA) in the meantime.
On October 30, the CySEC will cease accepting notifications from entities in the European Economic Area regarding their intentions to provide services in Cyprus under its national rules. 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 offering crypto asset services in the EU are reminded by the CySEC to study the ESMA standards in preparation for the transition to MiCA. Other regulators, such as the Dutch Authority for the Financial Markets, have already expressed concerns and are investigating potential market manipulation schemes before the transition to MiCA. The new regulations under MiCA will provide greater transparency and explicitly prohibit fraudulent activities.
ESMA has also proposed changes to MiCA, including the requirement for CASPs to undergo a cybersecurity audit and pass a thorough background check. The MiCA regulation was passed by the European Parliament in April 2023, and regulations concerning stablecoins came into force on June 30.