CySEC Chairman: Cyprus first in EU in cross-border investment services
07:41 - 23 January 2024
Cyprus is ranked first, among the EU member states, in providing cross-border investment services, the Chairman of the Cyprus Securities and Exchange Commission (CySEC) George Theocharides has said.
He was speaking after the session of the Parliamentary Finance Committee, where he presented the Commission's budget for 2024 on 22 January.
Theocharides noted that CySEC will promote a regulatory framework regarding crypto-assets from 2025, since by the end of 2024 the process of implementing the parameters of the relevant European regulation, which was voted by the European Parliament in June 2023, is expected to be completed.
In relation to Cyprus' "first place" in investment services, Theocharides said that there has been a steady growth in the financial services sector over the last four years, up to 12%, especially of the sector of investment companies and also of investment funds and investment fund managers. He added that Cyprus is the first country in Europe to provide cross-border investment services.
Theocharides told earlier the House Finance Committee that at the end of November 2023, CySEC had under its supervision 837 entities, while 85 new applications were under examination for licensing.
As to the reasons that led Cyprus to rank first among EU countries, CySEC's Chairman said that for about a decade, the sector of investment companies began to develop rapidly, due to the proximity to Israel, where there were a number of companies active in this field.
"Since Cyprus is an EU member and thus there was the possibility, by having CySEC's permission, to provide these services cross-border throughout Europe, some companies from our neighboring country decided to come to Cyprus, to settle in Cyprus and start developing this sector for the Cyprus' economy", he explained.
He also noted that Cyprus gradually acquired the know-how, creating "an ecosystem", as he described it, so that these companies can grow and have the services they need.
Regarding the regulatory framework for companies dealing with cryptocurrencies, the CySEC's Chairman explained that it will be a new area to be supervised in the coming years. At the moment, it is only supervised for the part that has to do with money laundering, he explained, adding that this is a process that all EU countries follow.
He also underlined that the goal is to protect investors to the greatest extent possible. In this context, he said that emphasis is also placed on actions to promote financial literacy, focusing on the topic of crypto-assets and on the engagement of young people.
Asked if there is a direct financial benefit for the Republic, from assets supervised by CySEC, Theocharides said that the direct benefits are the establishment of these companies in Cyprus, the employment of staff, the fact that there they pay direct and indirect taxes. "At the same time, I consider that an contribution is the fact that they can be the alternative form of financing for the Cypriot economy", he noted.
He explained that €3 billion, about 1/3 of the assets managed by these investment funds, are investments in the Cypriot economy, either in shipping, energy, education, or construction. "In this way an alternative financing can be created, which will certainly be positive for the Cypriot economy in order for us to become independent as a society from bank lending", he pointed out.
Administrative fines amounting to €6 million over a period of three years
During the supervisory controls carried out by CySEC, in the last three years, administrative fines of €6 million have been imposed, according to what Theocharides told the Parliamentary Finance Committee. Of these, Theocharides noted that €5.3 million has been collected.