The Cyprus Securities and Exchange Commission (CySEC) has announced the launch of public consultations on a draft new directive defining the procedure for submitting prudential supervisory information by providers of crypto-asset–related services. This move aims to strengthen oversight and increase transparency in the cryptocurrency sector in line with the EU-wide MiCAR regulation.
The regulator emphasizes that this initiative is part of the EU’s broader strategy to build a resilient and secure digital financial environment. Cyprus, as one of the region’s key financial centers, is consistently aligning its national regulatory framework with the new European standards.
MiCAR as the Basis for Unified Regulation in the EU
The Markets in Crypto-Assets Regulation (MiCAR) was published in June 2023 and became one of the key pillars of the European Commission’s Digital Finance Strategy. Its main objectives are to protect investors, reduce systemic risks, and ensure financial stability amid the rapid growth of the crypto market.
MiCAR introduced, for the first time, a unified legal framework for activities that had previously been largely unregulated at the EU level. This includes the issuance of crypto-assets, their custody, exchange, and the provision of related services. The regulation was implemented in stages: in summer 2024 it began to apply to issuers of asset-referenced tokens and e-money tokens, and from the end of December 2024 it was extended to crypto service providers as well.
What the New Directive Means for Crypto Companies
As part of the consultations, CySEC proposes adopting a directive regulating the format and frequency of prudential information submissions by crypto service providers in accordance with Article 67 of EU Regulation 2023/1114. The document introduces mandatory regular reporting to the supervisory authority and covers financial indicators needed to assess firms’ resilience and compliance with MiCAR requirements.
Companies will be expected to submit not only supervisory data but also financial statements, including trial balances, balance sheets, and profit and loss statements, as well as annual audited financial statements. According to CySEC, this approach will allow risks to be identified in a timely manner and will increase trust in the digital assets market.
Alignment with Investment Firm Regulation
The Cypriot regulator notes that the proposed reporting regime is largely aligned with existing requirements applicable to investment firms. This means that the crypto business is gradually being integrated into the EU’s traditional financial system and subjected to comparable supervisory standards.
The reporting deadlines set out in the draft directive are aligned with existing EU implementing regulations. This is expected to simplify administrative processes and ensure timely data submission for supervisory purposes.
Who Will Be Subject to the New Requirements
The consultations concern crypto-asset service providers that have been authorized by CySEC under Article 63 of MiCAR. At the same time, the regulator clarified that the new directive will not apply to central securities depositories, Cypriot investment firms, market operators, management companies, or alternative investment fund managers when they provide crypto services on the basis of notification.
Such entities are exempt from the prudential requirements of the draft directive, as they fall under other supervisory regimes within the EU legal framework.
Cyprus and the Future of Crypto Regulation
The launch of the consultations confirms Cyprus’s intention to remain attractive to crypto companies and fintech projects while strengthening oversight and alignment with EU-wide standards. As MiCAR becomes a binding reality across the EU, the timely adaptation of national rules gives Cyprus a competitive advantage as a regulated yet predictable jurisdiction for crypto businesses.
It is expected that the final version of the directive will be adopted after the consultations are completed, with the new requirements being introduced gradually in the near future, contributing to a more mature and sustainable crypto market on the island.