On the 2^nd of September, the first in-person Cyprus Fintech Summit took place at Carob Mill in Limassol. The Cyprus Fintech Summit is an internationally recognised summit dedicated to the future of technological innovation in financial services in Cyprus and abroad. Over the last couple of years, the summit has managed to grow considerably, attracting exciting fintech companies including investment firms, Electronic Money Institutions (EMI), and Crypto-Asset Services Providers (CASP).

This year’s edition entailed a full day of networking and panel discussions with professionals from all over the world sharing their expertise and insights. Our Managing Director, Nikolas Xenofontos, and our Risk & Compliance Director, Evdokia Pitsillidou, were invited to share their own expertise, knowledge, and experience. Nikolas and Evdokia mainly focused on the governance and regulatory compliance angle in dealing with regulators and various investment services, payment services, and crypto-asset services fintechs. Both SALVUS directors participated in different panels and helped the audience understand the development of the fintech sector in Cyprus and abroad.

What did we learn from “Chat #1 – Governance of FinTech in Europe”?

Evdokia shared how the CySEC CASP regime has gained significant traction including by some of the largest global players such as Revolut and Crypto.com who are now able to offer their services in and from Cyprus. This can be seen as an important milestone and a testament to the growth of the fintech and crypto industries in Cyprus. It also signals the continued success of establishing Cyprus as a European investment and innovation hub.

Moreover, there are many more applications by other established players and startups waiting to be reviewed to become CASP entities under CySEC and we are confident that more fintechs will be added to the CySEC CASP Register in the coming months.

Additionally, the panel discussed the rise of RegTech solutions within Cyprus Investment Firms (CIF), CySEC CASP, EMI, and other regulated entities around the globe. RegTech solutions help automate AML and KYC procedures and are increasing in popularity amongst regulators. The biggest obstacle regulators and fintechs using these RegTech solutions face is the actual understanding of how the technology works. This is mainly because these solutions are still in their early stages but also because there is not much regulation in this space yet.

It is important to note that CIF, CASP, EMI, and other regulated entities, have the ultimate responsibility when utilising the services offered by the RegTech companies to automate their client onboarding, KYT and other CDD measures. To round up this discussion, Evdokia elaborated on the importance of innovation and how RegTech solutions can help both the regulators effectively supervise the fintech sector and the regulated entities comply with their regulatory obligations.

What were the key takeaways from the “Chat #2 – Legal & Regulation in FinTech” panel?

Nikolas highlighted how the popularity of the Cypriot jurisdiction is the biggest challenge for fintech companies currently. In recent years, the Cyprus Securities and Exchange Commission (CySEC) and the Central Bank of Cyprus (CBC) have worked hard to modernise the Cypriot regulatory landscape and establish Cyprus as an attractive destination for innovative fintechs. Hence, we are seeing a large influx of fintech companies wanting to become licensed and regulated under CySEC for investment and crypto-asset services and the CBC for payments services.

As a result, both regulators are more demanding of applicants. CySEC and the CBC are communicating the importance of submitting strong applications that clearly demonstrate the fitness and properness of key stakeholders amongst other critical areas.

Furthermore, the much-anticipated Markets in Crypto-Assets (MiCA) regulation was also discussed. Currently, there is still no harmonised framework for the regulation of crypto-assets at the EU level. Thus, Nikolas shared how MiCA will add clarity and help differentiate between three groups of crypto-assets where different regulatory requirements will apply:

• Asset-referenced tokens
• E-money tokens
• Other crypto-assets

However, since MiCA is expected to come into force within the next couple of years, different EU member states have passed their own crypto-asset services provisions albeit temporarily. Moreover, Cyprus is an example of a jurisdiction that acted proactively and introduced the CASP regime by CySEC in 2021 with the aim of becoming a hub for crypto-assets in Europe. The CySEC CASP regime was designed based on the European Anti-Money Laundering Directive (AMLD) and enables crypto businesses to offer their services in and from Cyprus.

In a nutshell, the general consensus of the panel was that regulation plays a key role in facilitating the operational ecosystem for fintech and that innovation will come from private initiatives while regulators should closely follow.

Lastly, we would like to thank the Cyprus Fintech Summit for inviting SALVUS to headline their summit and also congratulate them for hosting a successful event. We would also like that thank both sets of panellists and moderators for the insightful discussions. We look forward to the next Cyprus Fintech Summit.

Please contact us at info@salvusfunds.com if you would like more information about the Cyprus Fintech Summit, are interested in setting up a CASP under CySEC, or need support in complying with any regulatory reporting obligations.

#StayAhead