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.