Want to find out if cryptocurrency is legal in Cyprus? This guide covers everything you need to know before making any decisions – from legality to ta
Last updated on February 7th, 2023 at 03:13 pm
Want to find out if cryptocurrency is legal in Cyprus? This guide covers everything you need to know before making any decisions – from legality to taxation and beyond!
Cryptocurrency can be a good option for those looking to make digital transactions within Cyprus, but it’s important to understand the legal and tax implications before committing to any trades. This guide will cover what you need to know about the legality of cryptocurrency in Cyprus, along with other relevant information.
With the rise of digital currency, Governments and countries around the world are slowly accepting it as a form of payment. Some countries ban the use of cryptocurrencies while in some, digital assets are legal. However, others are still sitting on the fence, not fully banning cryptocurrencies and not fully accepting them either.
Money has evolved over centuries from commodity money to metallic money, paper money, Credit money, Plastic Money, and now gradually moving to digital money. In recent years, cryptocurrency particularly Bitcoin has proved its value, bragging of about 19.25 million Bitcoins in circulation.
The phenomenon has raised so much interest over the years and investors are beginning to speculate about the future possibilities of this new technology. In our view, the acceptance of cryptocurrency will increase at a pace and more people will get to see the pros over the cons.
Before we dive right into it, for the sake of the newbies, let us give a brief overview of what cryptocurrency is.
Cryptocurrency or crypto for short is a virtual cryptography currency that is built on a blockchain. It serves as a payment portal or a medium for buying and selling. Putting it in layman’s terms, cryptocurrency is money inside computers.
Cryptocurrency does not have any management company or group of companies, it also isn’t issued by the financial institution(s), government, or any central authority. Cryptocurrency operations are fast and with 100% functionality success.
Bitcoin is the most popular cryptocurrency. It was created in 2009 by a person or group of persons functioning under the pseudonym Satoshi Nakamoto. Since Bitcoin, so many other cryptocurrencies (also known as Altcoins) have surfaced and a few examples of them are Ethereum, Dogecoin, Binance Coin, Litecoin, etc. Learn more about what is cryptocurrency from our detailed post Here.
What is the regulatory framework for cryptocurrency
Cryptocurrency is not outlawed or strictly prohibited in Cyprus, rather, there are two laws that address the use of cryptocurrencies – the Electronic Money Regulation and the Alternative Investment Funds Law.
These laws provide guidance on how to operate a cryptocurrency business legally, as well as details of taxation and reporting obligations. These laws are supplemented by directives and capital controls issued by the Central Bank of Cyprus.
Cryptocurrency regulations in Cyprus are becoming increasingly important for investors, as the local government takes steps to create a legal framework for cryptocurrencies.
With the growing interest in cryptocurrencies, the Central Bank of Cyprus (CBC) has been taking steps to create a framework for regulating cryptocurrency transactions. The legal framework for cryptocurrency in Cyprus is still being developed and it is important for investors to be aware of the latest updates.
Currently, banks are prohibited from facilitating transactions with any type of virtual currency, and institutions such as the Cyprus Securities and Exchange Commission (CySec) have issued warnings regarding potential investments in cryptocurrencies. Investors should also remain vigilant when choosing a custodian or exchange platform to ensure they are compliant with applicable laws and regulations.
In Blockchain technology, Europe holds a large significant share and Cyprus is at the heart of it. Cyprus has also been a prime location for blockchain and Fintech start-ups.
Cryptocurrency Laws in Cyprus
Cyprus at the moment has the AML law as the only legal framework that recognizes and identifies cryptocurrency assets. The AML law describes cryptocurrency assets as:
- being a digital representation of value that is not issued by a public authority or a Central bank.
- is not necessarily attached or tied to a legally established fiat currency.
- is accepted by people as a means of investment or exchange.
- and can also be transferred, traded, and stored electronically.
Two years ago, on November 25th, 2020, the Cyprus Securities and Exchange Commission (CySEC) passed Circular C417 on crypto asset investment. It is addressed to Cyprus investment firms and it contains guidance in the investment of crypto assets.
The purpose of the circular is to make sure that investment firms in Cyprus adequately manage the risks that are associated with crypto investments and also cover their investments in digital assets. Also, the circular is to guide investment firms and to give them confidence that they are complying with the laws in Cyprus.
To operate within Cyprus, there are three major requirements that Cyprus investment firms must satisfy.
- Investment firms in Cyprus must get authorization from Cyprus Securities and Exchange Commission (CySec) to trade cryptocurrencies.
- Cyprus investment firms must have enough capital to cover their cryptocurrency investments.
- The risk associated with cryptocurrency investment must be carefully managed by investment firms in Cyprus. Also. firms are charged with the duty to reduce the risks in trading cryptocurrencies which includes cybersecurity and other reputational risks.
The Central Bank of Cyprus has also warned about the risks that are associated with trading cryptocurrencies. In all, cryptocurrency in Cyprus is a big deal, and the legal framework surrounding it should be properly adhered to by investors.
Is Cryptocurrency Legal in Cyprus?
All entities that intend to offer services that fall under the Cryptocurrency Asset Service Providers (CASP) must first register in the registry in order to perform their activities as a Crypto Asset Service Provider.
So, is cryptocurrency legal in Cyprus? aside from the regulatory laws listed above, there are no other specific prohibitions or licensing requirements in Cyprus.
How to Buy Cryptocurrency in Cyprus
If you are looking for how to buy cryptocurrency in Cyprus, Changelly is a good cryptocurrency exchange where you can easily buy, sell and trade cryptocurrencies. Below are easy steps to follow to buy cryptocurrency on Changelly in Cyprus.
- Select the desired cryptocurrency pair: Select the desired cryptocurrency you would like to buy, and next choose the local currency you want to purchase the cryptocurrency with. Compare the offers and choose the one that is favorable.
- Provide the receiving wallet address: Put the wallet address in the space provided and cross-check to make sure it is correct.
- Verify your identity: Verify your information with the seller you have chosen to trade with. This is the best way to trust that the payment information belongs to you.
- Verify your payment: Verify every detail and go through with your payment and have the crypto delivered to your wallet in a few minutes.