CySEC Imposes New Reporting Rules on Crypto Firms for MiCA Compliance
The Cyprus Securities and Exchange Commission has launched a consultation on a proposed Directive requiring Crypto-Asset Service Providers to submit prudential and financial information. The initiative follows a previous CySEC consultation on proposed fees and reporting under MiCA. The consultation is open until 12 January 2026. Responses must be submitted via email in Word format, specifying whether the submitter is an individual, enterprise, or organized group.Crypto Firms Face New Reporting RequirementsUnder the draft Directive, authorized CASPs must provide periodic updates under the EU MiCA regulation. They must also submit financial reports, including trial balance, balance sheet, and profit and loss statements, as well as audited annual financial statements. The reporting framework aligns with existing prudential requirements for investment firms.Category 2 and 3 CASPs will report quarterly, while Category 1 CASPs will report annually. CASPs must revise submitted data if audited results differ, within five months of the end of the financial year.Regulator Reviews MiCA Applications, Stablecoins, PropCySEC Chair Dr. George Theocharides said the regulator is monitoring AI use in investment firms and reviewing multiple MiCA applications without rushing approvals. Crypto-asset service providers, including Revolut and eToro, undergo extensive scrutiny before licensing. Stablecoins and prop trading remain areas of ongoing attention due to potential risks to financial stability. Theocharides also noted that investor deception continues despite regulatory measures. The agency monitors finfluencers and issues guidance to ensure promotions comply with EU rules, emphasizing careful and gradual oversight.Cyprus Firms Face Stricter Compliance RequirementsTheocharides’ observations reflect the broader regulatory environment Cyprus firms will face in 2025. CySEC is increasing supervision of investment firms, funds, and crypto-asset service providers. In 2024, the regulator carried out over 850 audits, issued €2.76 million in fines, and revoked multiple licenses. Key EU regulations, including MiCA, AML Package, AIFMD II, and DORA, will further shape compliance and investor protection. Despite stricter oversight, Cyprus’ financial sector expanded, with 80 new entities authorized and firms actively seeking MiCA licensing under the evolving framework.