Fintech 2026

CYPRUS Law and Practice Contributed by: Angelina Fitoz, Svetlana Remezova, Darya Averyanova and Sude Dogan, Lawitt Buro

• Asset-referenced tokens (ARTs) – require CySEC authorisation and are subject to capital and reserve requirements. • E-money tokens (EMTs) – may be issued only by authorised credit institutions or electronic money institutions, supervised by the Central Bank. Initial Offers Public offers must comply with MiCA disclosure rules: • publication of a compliant White Paper, including risk disclosure and retail withdrawal rights; • marketing must be fair, clear and consistent with the White Paper; and • limited exemptions apply (eg, small offers or offers to fewer than 150 persons per member state). Tokenisation of Real-World Assets RWA projects face structural challenges. • A legally enforceable link is required between the on-chain token and off-chain ownership (often via SPVs or trusts). • Fractional profit rights may trigger MiFID II rather than MiCA. • National registries are not fully blockchain-integrat - ed, so off-chain formalities remain necessary. • Secondary market liquidity remains limited due to the absence of dedicated DLT trading venues. 10.5 Regulation of Blockchain Asset Trading Platforms In Cyprus, blockchain trading platforms are fully inte - grated into the regulatory framework. The regime dis - tinguishes between MiCA-authorised Crypto-Asset Service Providers (CASPs) and DLT market infrastruc - tures for tokenised financial instruments. MiCA Regime (CASPs) All crypto trading platforms operating in or from Cyprus must be authorised as CASPs under MiCA. • Legacy CASPs had to apply for MiCA authorisation by 27 February 2026 to benefit from transitional operation. • Core requirements include governance substance, safeguarding and segregation of client assets,

detailed record-keeping and DORA-compliant ICT resilience. • Firms failing to apply must implement an orderly wind-down. Tokenised Financial Instruments (DLT Pilot) Where tokens qualify as financial instruments, MiFID II applies. • CySEC permits DLT MTFs and DLT trading and settlement systems under the EU DLT Pilot. • This enables secondary trading of tokenised shares, bonds and fund units. • Atomic settlement is permitted, reducing counter - party risk. P2P and Decentralised Trading Travel Rule obligations apply to qualifying transfers, limiting anonymous on-ramp activity. • Platforms matching orders, even if non-custodial, require CASP authorisation. • Fully decentralised systems without an identifiable operator may fall outside licensing, but any central interface or controlling entity triggers regulation. 10.6 Staking In Cyprus, crypto staking is regulated based on how the service is structured. It now falls clearly within the MiCA framework rather than informal AML interpreta - tion. Regulatory Trigger Staking becomes regulated where a third party safe - guards or administers client crypto-assets. Provid - ers offering custodial staking must be authorised as CASPs under MiCA. Where staking is bundled with custody or exchange services, full MiCA operational requirements apply. Core Regulatory Requirements Staking providers must: • segregate client assets from their own estate; • clearly disclose risks, including slashing, lock-up periods and variable rewards; and • transparently explain fee-sharing arrangements and reward calculation.

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