The Cyprus Securities and Exchange Commission (CySEC) has announced the launch of a thematic review concerning the management of uninvested funds by Cyprus Investment Firms (CIFs) on behalf of clients.

This review, referred to as 'the Exercise,' aims to evaluate how CIFs handle these funds, including matters such as the payment of interest or returns.

Regulatory Compliance Assessment

The primary objective of the Exercise is to assess CIFs' procedures in this regard to ensure compliance with applicable regulatory standards. Key areas under scrutiny will include the methods and operational frameworks employed by CIFs, the transparency of information provided to clients, and the internal controls CIFs have in place to meet regulatory obligations, particularly concerning marketing communications.

CySEC emphasizes that the Exercise aligns with the regulatory framework, focusing on safeguarding investor interests and ensuring compliance .

To conduct this review, CySEC will employ a desk-based methodology targeting a selected sample of CIFs. In the upcoming days, CySEC plans to distribute a detailed questionnaire to these CIFs, who must respond within a specified timeframe and furnish supporting documentation as required.

Upon completion of the Exercise, CySEC will issue a comprehensive circular outlining its findings and any necessary actions resulting from the review process. This initiative underscores CySEC's commitment to upholding regulatory standards and enhancing investor protection within the Cyprus financial market.

MiCA Regulation Impact

Meanwhile, CySEC has initiated a consultation seeking feedback on proposed fees and reporting requirements under the Markets in Crypto-Assets Regulation (MiCA). This consultation aims to gather stakeholders' perspectives to shape the regulatory framework. Responses are due by July 17, 2024, as reported by Finance Magnates.

MiCA, effective from May 31, 2023, aims to establish a unified regulatory framework for crypto-assets in Europe, focusing on assets that are fungible but not financial instruments.

The regulation categorizes crypto-assets into asset-referenced tokens (ARTs), electronic money tokens, and others. CySEC will supervise entities such as crypto-asset offerors and ART issuers, excluding credit institutions.