Kraken executive says regulated digital finance can strengthen Cyprus economy

Nicosia, Cyprus. Regulated digital finance could become a new pillar of the Cypriot economy alongside tourism, shipping and professional services, creating more skilled jobs on the island, according to Stavros Vassiliades, COO and Executive Director of Payward Europe Digital Solutions (CY) Ltd.

Vassiliades said Kraken’s Cyprus operation supports its European derivatives business and signals that the island is a credible base for international fintech firms seeking access to the EU market.

Kraken’s European operations

Speaking to the Cyprus Mail, Vassiliades said Kraken, founded in 2011, is one of the oldest and largest digital asset platforms in the world.

Kraken’s CySEC-regulated Cypriot Investment Firm is central to its European derivatives business, while spot crypto trading in the EU is conducted through its MiCA hub, authorised by the Central Bank of Ireland.

Cyprus covers MiFID II-regulated products, primarily derivatives, including futures, tokenised stocks known as xStocks, and, more recently, traditional stocks. Through its MiCA and MiFID hubs, Kraken can passport services across the 30 countries of the European Economic Area.

Why Cyprus was selected

Vassiliades said the company chose Cyprus for regulatory, operational and strategic reasons.

He said the Cyprus Securities and Exchange Commission is among Europe’s most experienced supervisors of MiFID II firms, having developed experience through supervising an expanding range of retail financial products.

According to Vassiliades, this experience means the regulator understands complex products, while the local market has staff for key functions including compliance officers, anti-money laundering specialists and risk managers.

He said larger jurisdictions may offer greater scale, but Cyprus provided regulatory clarity, talent and a supervisor that engages substantively and constructively.

MiCA and MiFID II frameworks

Vassiliades said MiCA and MiFID II govern different products. MiCA is the EU framework for spot crypto-asset services, including exchanges, custody and stablecoins, while MiFID II applies to financial instruments, including derivatives with crypto-assets as their underlying assets.

A firm offering both types of services requires both licences, he said.

Under its MiFID II licence, Kraken can offer regulated financial instruments, primarily derivatives, across the EU under a harmonised rulebook. Spot bitcoin is a crypto-asset service under MiCA, while a bitcoin future is a financial instrument under MiFID II.

MiFID II protections include appropriateness and suitability tests, best-execution requirements, conflict-of-interest controls, segregated client money and capital requirements for firms.

Vassiliades said the intended client is an experienced trader seeking regulated access to derivatives rather than a person buying bitcoin for the first time.