Cyprus is positioning itself at the crossroads of digital transformation and sustainable finance as new European regulations take effect, marking 2025 as a pivotal year for the Mediterranean financial hub, according to the country’s top securities regulator.
Dr. George Theocharidis, Chairman of the Cyprus Securities and Exchange Commission (CySEC) revealed in the recent article for local newspaper “O Phileleftheros” that the institution currently regulates 825 financial institutions, with another 70 across various sectors awaiting authorization.
Cyprus Bets Big on Fintech Revolution
CySEC is preparing for a substantial regulatory overhaul as the Digital Operational Resilience Act (DORA) and Markets in Crypto Assets (MiCA) regulation come into full force, transforming the digital finance landscape across the European Union.
“The high-speed transformation of the financial sector will continue, with artificial intelligence at the heart of this effort,” wrote Dr. Theocharidis. “Cyprus could further establish itself as a fintech hub, attracting a new workforce with expertise in technology and innovation.”
Finance Magnates spoke with Dr. Theocharides nearly a year ago, also addressing the topic of artificial intelligence. As the head of CySEC noted, the subject “remains uncharted” in most of the EU’s securities markets. However, this situation is expected to evolve over the coming quarters.
The regulator expects Cyprus’s economy to grow by 2.8% in 2025, while inflation is projected to moderate to 2%. As the CySEC Chairman added, the “financial services industry will continue to contribute positively to the growth of the Cypriot economy,” similar to 2024.
Sustainable Finance
Sustainable finance emerges as another key focus area, with Alternative Investment Funds managers expected to expand their offerings in green bonds and ESG-focused products. However, Theocharidis warned about the risks of greenwashing, emphasizing the need for robust supervision of sustainable investment claims.
“Alternative Investment Funds and their managers, in line with relevant European regulations, are expected to make further progress in developing green bonds, ESG shares, and other investment products that incorporate sustainable practices,” added Dr. Theocharidis.
The regulator also acknowledges that geopolitical tensions in the Eastern Mediterranean and the ongoing conflict in Ukraine pose significant challenges to market stability. Despite these headwinds, Cyprus’s financial sector is expected to maintain its growth trajectory, particularly in green energy and technology sectors.
CySEC Chief Sees Tech Talent Influx amid Digital Push
“Cyprus could further establish itself as a fintech hub, also attracting a new workforce with expertise in technology and innovation,” commented the CySEC Chairman.
As forecasted, in 2025, we will witness a high-speed transformation of the financial sector, not only in Cyprus but across Europe, with artificial intelligence taking a leading role. The digitization of the financial sector will bring new opportunities that the Cypriot regulator aims to leverage.
At the end of October, CySEC announced plans to tighten its grip on investment firm capital by adopting the new European Banking Authority (EBA) guidelines. These regulations came into effect at the beginning of January 2025.
“The capital market sector in Cyprus will continue to grow at a steady pace in 2025,” Dr. Theocharidis concluded.
This article was written by Damian Chmiel at www.financemagnates.com.RegulationRead More
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