The Cyprus Securities and Exchange Commission (CySEC) has reported a remarkable 200% increase in its market supervision activities since 2011, with the number of entities under its supervision surging from 250 to nearly 800.
George Theocharides, the new chairman of CySEC, highlighted that the total assets managed in Cyprus investment funds have grown to €11.6 billion, signaling substantial potential for further expansion. Among the entities under CySEC’s supervision, there are presently 240 investment firms. Approximately half of these firms cater to institutional investors, while the remainder provide trading services to private investors.
Theocharides also noted that following the United Kingdom’s departure from the European Union, Cyprus now hosts the largest number of digital platforms in the EU. According to CySEC’s data, all investment companies operating in Cyprus collectively employ approximately 6,000 individuals. Many of these companies offer supplementary services such as legal, auditing, and compliance services, thereby contributing significantly to the Cypriot economy while generating numerous job opportunities.
Regarding the regulation of digital currencies, Theocharides outlined CySEC’s intentions to promote financial technology innovation while complying with all regulatory legislation. CySEC has already received applications from prospective cryptocurrency asset service providers and has initiated the evaluation and processing of these applications.
In a policy statement released in September, CySEC outlined the regulatory rules for cryptocurrency asset service providers. These rules draw from existing legislation related to anti-money laundering and counter-terrorist financing, as well as directives from the European Commission. While this initiative aims to mitigate certain risks associated with cryptocurrency investments, CySEC acknowledged that additional risks may be addressed by the EU through subsequent legislation.
CySEC President Demetra Kalogerou emphasized the commission’s commitment to fostering responsible innovation in financial technology, collaborating with cryptocurrency companies, and facilitating consultation with emerging fintech providers. The commission continues to work on financial innovation at both national and European levels, aiming to encourage responsible innovation while ensuring the smooth functioning of markets.
CySEC also clarified that depending on their structure, some cryptocurrency assets could meet the definition of financial instruments. This would subject them to legislation governing investment services outlined in the European Commission’s E-Money Directive (EMD) and the Markets in Financial Instruments Directive (MiFID II). Furthermore, these assets might be considered digital representations of value not issued or guaranteed by the Central Bank of Cyprus or any other public authority.
As Theocharides emphasized, the digital currency sector is expected to experience significant growth in the future, prompting the EU to prepare a directive. CySEC is determined to be ready to regulate these platforms effectively as the industry evolves.