The Cyprus Securities and Exchange Commission will launch on-site inspections and desk-based reviews of authorized crypto asset service providers starting in the second half of 2026 through mid-2027.
Key Takeaways
CySEC and ESMA announced joint digital resilience audits for crypto custody providers under CSA 2026.EU crypto custodians must prove strict compliance across 6 core operational risk areas.CySEC will execute on-site and desk reviews on a sample of firms from H2 2026 to H1 2027.The enforcement initiative, scheduled to run from the second half of 2026 through the first half of 2027, marks a significant increase in direct regulatory scrutiny for crypto firms operating in Cyprus.
The inspections will focus on authorized CASPs approved to offer digital asset custody services. Regulators aim to assess the maturity of these firms’ operational security and technical infrastructure, with particular attention to risks tied to distributed ledger technology.
Other areas under review include transaction controls, monitoring and incident response, smart contract security and third-party risk management.
The initiative aligns CySEC with national competent authorities across the European Union and responds directly to ESMA’s risk-based supervisory priorities. EU regulators have repeatedly identified operational resilience and digital asset custodians as high-risk focal points for financial stability and investor protection.
By establishing a standardized framework for on-site visits and desk audits, ESMA and national regulators aim to promote supervisory convergence across member states and ensure uniform security expectations as the crypto ecosystem continues to integrate with traditional finance.
