I have a nice black silk kippah, the only problem is that it's too big. Can i cut around to make it smaller? Is there holiness in Kippa, is there a prohibition to cut it?
A kippah is not a sacred garment. (The Star-K had found people putting worn-out kippahs in a disposal box intended for worn-out scrolls, which must be buried. So they had to mention that a worn-out kippah may be thrown in the trash!)
A kippah is a hat. If you feel like cutting it, go right ahead. Practically I don't know how the edges will then look, but you can figure that out.
A more interesting question is how big should a kippah be for the sake of fulfilling the custom of wearing one. (You can ask a separate question about that.) Assuming you'll be wearing something big enough, cut away!