Dubai’s regulators may have had the luxury of starting on a
blank sheet of paper: it attracted and utilised talent and knowledge from
experienced professionals that worked in more mature supervisory bodies and is also being able to take any direction it considers optimal for the jurisdictions
short, medium and long-term. Cyprus, an EU member state, by contrast, must fit
into the ever-thickening EU rulebook of PSD2, MiFID II, MiCA and the
Anti-Money-Laundering Package.
Yet a different starting point is no longer an
excuse for Cyprus, not to aim for the same destination of hyper-scale in
hyper-responsible manner – even if not at the hyper-speed of the UAE.
The
Cyprus Securities and Exchange Commission (CySEC) and the Central Bank of
Cyprus (CBC) can still import the best UAE mechanics – without breaching EU discipline. In fact, the Abu Dhabi Global Market (ADGM) and the
Dubai International Financial Centre (DIFC) have a proven playbook that Cyprus could implement
immediately.
1. Rolling-Review Sandboxes
I call these “license while you build”.
The DIFC’s Innovation Testing Licence (ITL) grants a
provisional permit, then reviews progress in 30- to 90-day bursts while the
product is still being coded. If the firm meets pre-agreed KPIs—say, daily VaR
below 0.5 %—the licence automatically graduates to full status. ADGM’s RegLab
takes the same “test-and-learn” approach, giving supervisors live dashboards
instead of static PDFs.
CySEC’s own sandbox , is the perfect canvas to adopt true
rolling reviews rather than one-off “letters of comfort”. A phased licence
aligned to EU proportionality principles would reduce time-to-market without
relaxing investor protection.
Dubai’s financial regulator has introduced an Innovation Testing License, giving fintechs room to experiment in a simplified regulatory sandbox within the DIFC. pic.twitter.com/VmwiIJjYCv
— WAYA Media (@waya_media) May 4, 2025
2. Risk-Based Licence Paths
VARA and the DFSA calibrate capital, disclosure and audit
depth to business-model risk: a low-volume advisory gets lighter scrutiny than
a leveraged derivatives venue. Cyprus still funnels most applicants—CFD
brokers, EMI start-ups, crypto custodians—through a single process that can
exceed 12 months.
A better approach? Publish a CySEC and a CBC “risk matrix”:
green channel (advisors, no leverage, no clients’ funds), amber (spot crypto, PISPs/AISPs),
red (margin products, algorithmic venues). Such a risk
matrix policy is entirely EU-compatible: for example, Article 7 of MiCA and
Recital 15 of PSD2 already endorse proportionality.
3. Real-Time Supervisory Data
ADGM’s Digital Lab lets regulators pull API data—latency,
order-book depth, margin calls—in almost real time, replacing quarterly
spreadsheets with heat-maps.
Cyprus should mandate API-based risk streams into CySEC’s
and CBC’s new RegTech back-ends. Nothing in EU law bars this; in fact, ESMA’s
2024 supervisory convergence report calls for “machine-readable” submissions.
Faster anomaly detection protects retail traders and burns less supervisory
manpower, that could be focused on initiatives such as those listed in here.
You may also like: Cyprus FX Exec Pay Drops, Compliance Salaries Soar; Dubai Stays Lucrative
The Need for an Ongoing Discussion
Further, the regulators in Cyprus should implement proper channels to remain in touch and
connected to the industry and gather real insights for further improvement. Dubai’s
regulators hold monthly, agenda-free roundtables where supervisors, founders
and investors debate edge-case scenarios before they become headlines. The
conversations de-risk policy drafts and reduce lobbying friction.
Cyprus could institute majlis focused on hot topics—AI
trading signals, finfluencer marketing, DeFi staking. Minutes published in near
real time would raise transparency and pull private-sector expertise into
first-draft legislation.
The CySEC must be compliant with the requirements of the pan-European financial market regulator. However, the suggestions to mimic the UAE playbook would not violate any of the pan-European rules.
Read more: FCA Warns Tech Firms Not Doing Enough to Stop Illegal Forex Finfluencers
Brussels is not the barrier – inertia is:
- Phased
sandboxes are already embedded in ESMA’s 2023 FinTech Guidelines. - Risk-weighted
reviews mirror the EBA’s SREP methodology for banks. - RegTech
APIs align with the Digital Operational Resilience Act’s call for
continuous monitoring. - Stakeholder
forums echo the Commission’s new structured-dialogue approach used in the
2024 instant-payments package.
And there some obvious pay-offs on implementing these measures. It can even directly uimpact the efficiency of the licencing regime.
- Speed
– Rolling reviews could halve the median licence timeline from 12 (or
more) months to six without loosening prudential screws. - Safety
– Live risk data, and early-warning majlis sessions shrink the window for
consumer harm and market abuse. - Signal
to founders – A publicly documented fast lane tells the next wave of
PSPs, brokers and tokenisation platforms that Cyprus is serious about
custodianship and innovation.
Dubai’s experience shows that hyper-scalable can be
hyper-responsible, and that is not marketing fluff. It is operational design.
Cyprus may have had a different starting point, but the desired destination is
the same and borrowing the best practices – in this case the UAE’s mechanics –
and embedding them inside the EU’s robust legal architecture, can still sprint the
island to the front of Europe’s fintech pack.
Dubai’s regulators may have had the luxury of starting on a
blank sheet of paper: it attracted and utilised talent and knowledge from
experienced professionals that worked in more mature supervisory bodies and is also being able to take any direction it considers optimal for the jurisdictions
short, medium and long-term. Cyprus, an EU member state, by contrast, must fit
into the ever-thickening EU rulebook of PSD2, MiFID II, MiCA and the
Anti-Money-Laundering Package.
Yet a different starting point is no longer an
excuse for Cyprus, not to aim for the same destination of hyper-scale in
hyper-responsible manner – even if not at the hyper-speed of the UAE.
The
Cyprus Securities and Exchange Commission (CySEC) and the Central Bank of
Cyprus (CBC) can still import the best UAE mechanics – without breaching EU discipline. In fact, the Abu Dhabi Global Market (ADGM) and the
Dubai International Financial Centre (DIFC) have a proven playbook that Cyprus could implement
immediately.
1. Rolling-Review Sandboxes
I call these “license while you build”.
The DIFC’s Innovation Testing Licence (ITL) grants a
provisional permit, then reviews progress in 30- to 90-day bursts while the
product is still being coded. If the firm meets pre-agreed KPIs—say, daily VaR
below 0.5 %—the licence automatically graduates to full status. ADGM’s RegLab
takes the same “test-and-learn” approach, giving supervisors live dashboards
instead of static PDFs.
CySEC’s own sandbox , is the perfect canvas to adopt true
rolling reviews rather than one-off “letters of comfort”. A phased licence
aligned to EU proportionality principles would reduce time-to-market without
relaxing investor protection.
Dubai’s financial regulator has introduced an Innovation Testing License, giving fintechs room to experiment in a simplified regulatory sandbox within the DIFC. pic.twitter.com/VmwiIJjYCv
— WAYA Media (@waya_media) May 4, 2025
2. Risk-Based Licence Paths
VARA and the DFSA calibrate capital, disclosure and audit
depth to business-model risk: a low-volume advisory gets lighter scrutiny than
a leveraged derivatives venue. Cyprus still funnels most applicants—CFD
brokers, EMI start-ups, crypto custodians—through a single process that can
exceed 12 months.
A better approach? Publish a CySEC and a CBC “risk matrix”:
green channel (advisors, no leverage, no clients’ funds), amber (spot crypto, PISPs/AISPs),
red (margin products, algorithmic venues). Such a risk
matrix policy is entirely EU-compatible: for example, Article 7 of MiCA and
Recital 15 of PSD2 already endorse proportionality.
3. Real-Time Supervisory Data
ADGM’s Digital Lab lets regulators pull API data—latency,
order-book depth, margin calls—in almost real time, replacing quarterly
spreadsheets with heat-maps.
Cyprus should mandate API-based risk streams into CySEC’s
and CBC’s new RegTech back-ends. Nothing in EU law bars this; in fact, ESMA’s
2024 supervisory convergence report calls for “machine-readable” submissions.
Faster anomaly detection protects retail traders and burns less supervisory
manpower, that could be focused on initiatives such as those listed in here.
You may also like: Cyprus FX Exec Pay Drops, Compliance Salaries Soar; Dubai Stays Lucrative
The Need for an Ongoing Discussion
Further, the regulators in Cyprus should implement proper channels to remain in touch and
connected to the industry and gather real insights for further improvement. Dubai’s
regulators hold monthly, agenda-free roundtables where supervisors, founders
and investors debate edge-case scenarios before they become headlines. The
conversations de-risk policy drafts and reduce lobbying friction.
Cyprus could institute majlis focused on hot topics—AI
trading signals, finfluencer marketing, DeFi staking. Minutes published in near
real time would raise transparency and pull private-sector expertise into
first-draft legislation.
The CySEC must be compliant with the requirements of the pan-European financial market regulator. However, the suggestions to mimic the UAE playbook would not violate any of the pan-European rules.
Read more: FCA Warns Tech Firms Not Doing Enough to Stop Illegal Forex Finfluencers
Brussels is not the barrier – inertia is:
- Phased
sandboxes are already embedded in ESMA’s 2023 FinTech Guidelines. - Risk-weighted
reviews mirror the EBA’s SREP methodology for banks. - RegTech
APIs align with the Digital Operational Resilience Act’s call for
continuous monitoring. - Stakeholder
forums echo the Commission’s new structured-dialogue approach used in the
2024 instant-payments package.
And there some obvious pay-offs on implementing these measures. It can even directly uimpact the efficiency of the licencing regime.
- Speed
– Rolling reviews could halve the median licence timeline from 12 (or
more) months to six without loosening prudential screws. - Safety
– Live risk data, and early-warning majlis sessions shrink the window for
consumer harm and market abuse. - Signal
to founders – A publicly documented fast lane tells the next wave of
PSPs, brokers and tokenisation platforms that Cyprus is serious about
custodianship and innovation.
Dubai’s experience shows that hyper-scalable can be
hyper-responsible, and that is not marketing fluff. It is operational design.
Cyprus may have had a different starting point, but the desired destination is
the same and borrowing the best practices – in this case the UAE’s mechanics –
and embedding them inside the EU’s robust legal architecture, can still sprint the
island to the front of Europe’s fintech pack.
