Cyprus orders VASPs to prove compliance by January 10

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As the European Union welcomes the Markets in Crypto-Assets (MiCA) framework, Cyprus demands that local VASPs prove their compliance within a week.

MiCA took full effect on December 30, with regional and national regulators rushing to provide regulatory guidance to VASPs. In Cyprus, the Securities and Exchange Commission (CySEC) indicated in October that it would grant any firm that registers before the December 30 deadline a grace period until July 1, 2026.

In a December 31 update, the regulator reiterated that VASPs that could prove they were compliant with Cypriot laws by December 30 could continue operating until their license applications under MiCA Article 63 are determined.

However, it added that it now requires all VASPs seeking to benefit from this exemption to submit evidence by January 10 that they have been compliant with its rules.

“Specifically, they must submit a relevant certification from the Internal Auditor confirming that the CASP provided services before 30 December 2024,” the regulator stated.

The certification must include details about their services, the number of clients they served, the transactional volume, clients’ capital, and their revenue and profit records.

“In essence, the CySEC is establishing a process to verify the legitimacy and ongoing operations of existing CASPs before granting them the opportunity to apply for a full license under the new regulatory framework,” it added.

While Cyprus offers a grace period, Latvia’s central bank has pledged to offer free consultation to any VASP seeking a license under MiCA.

“Crypto-asset service providers can begin their journey toward securing the license by taking advantage of free pre-licensing consultations offered by Latvijas Banka,” the bank stated on January 2, reiterating a similar pledge it made last September.

Latvijas Banka’s experts will guide VASPs on “the viability of applications, regulatory compliance, and document readiness.”

Commenting on the offer, Deputy Governor Santa Purgaile noted that the bank has aligned its VASP regulatory approach with EU standards, balancing flexibility with responsibility. To qualify, VASPs must pay a supervision fee of 0.6% annually, with a €3,000 ($3,079) minimum.

Latvia’s free consultation and simplified framework is intended to attract European VASPs with difficulties obtaining licenses in their local jurisdictions. With MiCA, a company can register in any of the EU nations and leverage the EU passport to serve the rest of the region.

Just days after it took effect, MiCA is having a massive effect on the European digital asset industry. Stablecoins have been among the first to feel the heat; USDT, the market leader, shed $3 billion in the last ten days of the year as uncertainty over its European future heightened. Tether, USDT’s issuer, has been reluctant to obtain the new license as it would need to abide by new laws threatening its opaque and often-illegal business model.

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