**CySEC Issues Warning to Cyprus Investment Firms Over New €30 Billion Threshold Rules**
The Cyprus Securities and Exchange Commission (CySEC) has issued a circular urging investment firms in Cyprus to carefully review proposed European regulations that could necessitate the reclassification of some of the largest firms as credit institutions. This advisory comes in the wake of a consultation launched by the European Banking Authority (EBA) on August 25, which focuses on draft regulatory technical standards (RTS) concerning the reclassification process.
The proposed changes stem from amendments to the Capital Requirements Directive (CRD) framework, aimed at enhancing the proportionality, transparency, and risk-based assessment of when an investment firm must secure a banking license. Specifically, Article 8a of the CRD stipulates that investment firms with total assets exceeding €30 billion are generally required to obtain authorization as credit institutions, rather than continuing to operate under a Markets in Financial Instruments Directive (MiFID) investment firm authorization.
The EBA's draft RTS outlines the methodology for calculating the €30 billion threshold at both individual and group levels. Additionally, it details the reporting requirements that firms must adhere to in order for regulators to effectively monitor compliance with the threshold. The EBA has indicated that the revised methodology is necessary due to changes in Article 8a, which have narrowed the scope of the group-level calculation.
Under the new approach, only the assets of EU undertakings and their subsidiaries engaged in MiFID activities, along with EU branches of third-country entities within the same group, will be included in the asset calculation. This adjustment is designed to simplify the calculation and reporting requirements compared to the previous global approach.
Investment firms that fall under the reporting requirements will only need to submit information if their total assets exceed €5 billion. They will be required to complete two reporting templates each quarter, with monthly figures derivable through straightforward interpolation, thereby reducing the reporting burden on firms.
Furthermore, the proposed rules delineate how regulators should evaluate requests for waivers from the requirement to obtain credit institution authorization. This assessment will involve examining the organizational structure of the group, its booking practices, and asset allocation. Authorities will also consider the business model of the entity, the proportion of transactions conducted on behalf of clients, and utilize available regulatory tools to gauge systemic risk, in addition to analyzing the size and complexity of the derivatives portfolio and overall footprint.
CySEC has strongly encouraged Cyprus investment firms to engage with the consultation paper and draft RTS, assessing their potential impact on business models, group structures, and prudential reporting processes. The regulator has also advised firms to stay informed about further developments as the EBA works towards finalizing the standards.
Interested parties have until November 25, 2026, to submit comments directly to the EBA as part of its consultation process. Additionally, the EBA will host a virtual public hearing on September 30, 2026, at 10 AM CEST, with registration open until September 25.
The consultation is part of a broader effort to implement requests from EU legislators regarding the methodology for calculating CRD thresholds, the information necessary for regulatory monitoring, and the factors that should be considered when granting waivers. As such, CySEC is emphasizing the importance for Cyprus investment firms to evaluate the proposed regulatory framework, particularly those firms whose asset levels or group structures may place them within the new requirements.