Cyprus's financial regulator is giving crypto-asset service providers a narrow window to operate under existing national regulations before new EU-wide rules take effect. The Cyprus Securities and Exchange Commission (CySEC) announced today (Thursday) it will stop accepting notifications from European Economic Area (EEA) firms for cross-border crypto services on October 30, 2024.

CySEC Sets October 30 Deadline for Crypto Firms Under National Rules

This deadline comes just two months ahead of the Markets in Crypto-Assets (MiCA) implementation for crypto service providers, set for December 30. Firms that successfully notify CySEC by the October 30 cut-off will be permitted to continue their cross-border operations during a transitional period lasting until July 1, 2026, or until they receive a decision on their MiCA authorization, whichever comes first.

“Notifications received after the above Cut-Off Date are unlikely to be assessed before MiCA comes into application,” the regulator commented in the official statement. In case the abovementioned market participants submit an application for authorization in accordance with MiCAR, they must inform CySEC immediately whether they are authorized or not during the transitional period, to proceed with the update of the EEA CASP Register.”

CySEC has already ceased accepting Crypto-Asset Service Providers (CASPs) registrations under national rules as of October 17, 2024, further emphasizing the regulator's preparation for the MiCA regime.

This is another CySEC circular following the June consultation launched by the regulator to gather market views on the proposed fees and reporting requirements under the new EU crypto rules.

EU Crypto Regulations

These developments in Cyprus are part of a larger trend across the European Union as member states prepare for the implementation of MiCA. The regulation aims to create a harmonized crypto regulatory framework across the EU, potentially reshaping the continent's digital asset landscape.

MiCA, which officially entered into force on June 29, 2023, aims to create a comprehensive framework for crypto-assets not covered by existing financial services legislation. The regulation is set to be fully implemented in stages, with complete application expected by December 30, 2024.

Crypto-asset service providers registered in Cyprus are now faced with a clear timeline:

• Submit notifications to CySEC by October 30, 2024, if they wish to operate under current national rules during the transition period.
• Prepare for MiCAR compliance , which becomes applicable on December 30, 2024.
• Obtain MiCAR authorization by July 1, 2026, at the latest, to continue operations in the EU.

This week, the European Securities and Markets Authority (ESMA) addressed the European Commission's proposal to amend the Regulatory Technical Standards (RTS) under the MiCA. In its response, ESMA recognizes the legal constraints highlighted by the Commission and stresses the significance of the policy objectives outlined in the proposal.