The European Union will transition from national laws on crypto asset service providers (CASPs) to common Markets in Crypto-Assets (MiCA) regulations by Dec. 30. The Cyprus Securities and Exchange Commission (CySEC) is providing an example of that transition as it freezes CASP applications and warns market participants of changes to come.

Planning for a smooth transition

The CySEC will no longer accept CASP applications under Cypriote national laws as of Oct. 17, the day of the announcement. CASPs that succeed in registering under the national laws before the Dec. 30 deadline will be able to operate under that jurisdiction until July 1, 2026, unless they are granted or refused authorization under MiCA Article 63 before then. 

CASPs will be subject to the European Commission’s Regulatory Technical Standards and the Implementing Technical Standards once MiCA regulations kick in. Those standards have not been published yet, but the CySEC advised interested parties to refer to the Draft Technical Standards issued by the European Securities and Markets Authority (ESMA) in the meantime.

On Oct. 30, the CySEC will stop accepting notifications under its national rules from entities in the European Economic Area of their intentions to provide services in Cyprus. Entities that file a notification before then will be able to operate under the same conditions as local entities through July 1, 2026.

Source: Cyprus Securities and Exchange Commission

A far-reaching transition

Cyprus-based entities may currently offer crypto asset services in the EU under any of three national laws. The CySEC reminded them that they should also be studying the ESMA standards in preparation for the transition to MiCA.

Other regulators have raised concerns already.

The Dutch Authority for the Financial Markets said in September that it was investigating potential market manipulation schemes before the transition to MiCA. Fraud of that sort would be more easily detected under the more transparent new regulations, and it would be more explicitly prohibited as well. 

ESMA has urged some changes to MiCA. It wants CASPs to undergo a cybersecurity audit and pass a thorough background check. The European Parliament passed the MiCA regulation in April 2023. MiCA regulations concerning stablecoins came into force on June 30.

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