Dr George Theocharides: Capital markets going digital in 2025

In 2025, Cyprus and European capital markets will continue to be influenced by regulatory changes, digital transformation, European Central Bank monetary policies, and sustainable investments, according to Dr George Theocharides, Chairman of the Cyprus Securities and Exchange Commission (CySEC).

In a written statement, Theocharides also said that global economic conditions and geopolitical risks will also pose significant challenges.

As he said, the European Commission's fall macroeconomic forecasts say Cyprus' economy is projected to grow by 2.8% in 2025, with inflation slowing to 2%. Also, wage increases are expected to boost household purchasing power and consumption, with tourism and financial services remaining key contributors to growth.

MiCA and DORA

CySEC reported 825 supervised entities in November 2024, with around 70 new licence applications under review. The Markets in Crypto-Assets Regulation (MiCA), effective from January 2025, will enhance licensing and investor protection for crypto service providers, says Theocharides, while the Digital Operational Resilience Act (DORA), also coming into effect, will set cybersecurity standards for financial institutions.

AI-driven digital transformation will accelerate, with Cyprus positioning itself as a fintech hub, according to the CySEC Chairman. Sustainable investments, particularly in ESG-compliant products, are expected to grow, presenting both opportunities and challenges in ensuring transparency and avoiding "greenwashing".

However, Theocharides believes ongoing geopolitical tensions, including the war in Ukraine and economic uncertainty, will impact investment strategies and market stability. Despite these challenges, he said, Cyprus' economy is expected to maintain positive growth, with increased investments in green energy and technology driving further development in 2025.