Cyprus is a member of the EU, and it’s been known for years as an offshore with complicated crypto regulation framework. Binance, Bybit, and many other crypto companies are licensed here. However, it has some pressure from other EU members and FATF. Recently, Binance was rejected(1) from Cyprus license in June 2023.
Country overview
#45
CyprusCountry stats
Rating Points
246
This indicator describes the overall rating of a given jurisdiction on several parameters according to cryptocurrency operations - market volume, crypto regulation, business climate, taxation framework.
Crypto Penetration
1.2%
Estimated percentage of crypto users out of the country's total population based on public data.
Legal Entities
11
Number of crypto companies registered in the country based on regulator data if available or other types of public data.
Regulation Points
160
An overall assessment of the granularity of crypto regulation in a given country. A high score is also given to countries where cryptocurrency transactions are highly regulated.
Amount of crypto users
14 400
Total amount of crypto users out of the country's total population based on public data.
Taxation points
24
This figure, according to our analysts' calculations, indicates the overall level of tax burden for cryptocurrency transactions in a given country. The higher the indicator, the lower the burden.
Market volume points
2.3
A rough estimate of this jurisdiction's retail crypto market relative to the rest of the world. The higher the indicator, the higher the market potential.
Status of crypto
Legally allowed
General status of cryptocurrency regulation in this jurisdiction.
Crypto payments
Legally allowed
The legal status of cryptocurrency payments for goods and services in a given country based on information from regulators, public data and feedback from our community.
Security Level
Minor danger
The overall level of security in a given country based on open data.
Crypto Salaries
Only part
The legal status of cryptocurrency salaries to employers in a given country based on information from regulators, public data and feedback from our community.
Business Climate
Good
Overall assessment of the friendliness of this country for crypto-business. This indicator takes into account the cost of obtaining a license and the attitude towards crypto entities in the country.
Stablecoin Regulation
Basic
This indicator is evaluating the regulation of stablecoins in a given country. Complex regulation means that it is possible to issue steiblcoins and obtain a license for this activity. Basic regulation means that the issuance of stablecoins is possible, but not all legal aspects are defined in the law. Standard regulation means that there is a legal practice of steylcoin circulation in a given country.
Bad Factors
No
This section describes the unfavorable economic factors for crypto-business in a given country. These are countries that are under sanctions or on the FATF grey list and other factors.
Types of licenses
Crypto-to-crypto
This license type allows VASP to provide legal exchange from one cryptocurrency to another.
Crypto-to-fiat
This type of license regulates the exchange from cryptocurrency to fiat.
Wallet/Custody
This country has a legal licensing procedure for companies that store cryptocurrency - - crypto wallet providers and custodians.
Cryptofund
This indicator means that investment funds, trusts, and crypto funds can get regulator approval to provide their activity in the country.
Good
Medium
Bad
Cyprus has a minor danger security level according to our rating. Jurisdiction has 67.4 points (from 100) for safety level in Numbeo crime rating (2). The homicide level (3) is 1.3 per 100,000 inhabitants a year. Level of firearm-related death (4) 1.00 per 100,000 inhabitants a year.
According to Pahalaw (5), there is currently no specific legal framework for cryptos in Cyprus; it is neither forbidden nor banned. It may not be used to obtain citizenship status or tax residence directly as all payments must be effected in fiat currencies. At the same time, it’s free to use as a payment method by agreement.
Based on Pahalaw (5), local companies can freely use cryptos to form a contract with an employee, provided such volatile payments are entirely accepted. However, all contributions to the Social Insurance will be made in fiat currency (EUR) on the given salary stated in an employee’s contract.
Based on GLI (6), current regulations in the country defining the status of crypto operations are included in the AML directive. Crypto Asset Service Provider (CASP) is the term that describes crypto entities in Cyprus legislation. They have the following operations:
Exchange between crypto-assets and fiat currencies.
In the country, there is a separate crypto regulator - CySEC. And here, you may find the text of AML law (7). Based on the CySEC site (8), Cyprus's required initial capital for crypto licenses differs from 50,000 to 150,000, depending on the license type. There are the following types of crypto permits issued in Cyprus in the table below:
| Type of license | Licensed activities |
| CASP Class 1 | CASPs that provide investment advice |
| CASP Class 2 | CASPs providing the service referred to in Class 1 and/or any of the following services: • reception and transmission of client orders • execution of orders on behalf of clients • exchange between crypto-assets and fiat currency • exchange between crypto-assets • participation and/or provision of financial services related to the distribution, offering, and/or sale of crypto-assets, including the initial offering • placement of crypto-assets without a firm commitment • portfolio management. |
| CASP Class 3 | CASPs that provide any of the services referred to in Class 1 or 2 and/or • administration, transfer of ownership, transfer of site, holding, and/or safekeeping, including custody, of crypto-assets or cryptographic keys or means enabling control over crypto-assets • underwriting and/or placement of crypto-assets with firm commitment • operation of a multilateral system, which brings together multiple third-party buying and selling interests in crypto-assets in a way that results in a transaction. |
In November 2022, CySEC got 27 applications (9) for crypto licenses and approved 5. Also, five more legal entities from other EU countries got approval for operations in Cyprus.
| Tax name | Index |
| PIT tax Min | 0 |
| PIT tax Max | 35 |
| Corporate tax (CIT) | 12,5 |
| Min Individual CGT (for crypto) | 20 |
| Max Individual CGT (for crypto) | 20 |
| Wealth tax Min | 0 |
| Wealth tax Max | 0 |
Based on CyAuSe (10) Cyprus has the same approach to crypto transactions as to foreign currency income operations income.
CIT
Based on PWC (11), all companies tax residents of Cyprus are taxed on their income accrued or derived from all sources in Cyprus and abroad. A non-Cyprus tax resident company is taxed on income accrued or derived from business activity that is carried out through a PE in Cyprus and on certain other payments arising from sources in Cyprus. CIT is 12,5%. Based on Mondaq (12), crypto trading as a business has a standard CIT flat rate of 12,5%.
CGT
Based on Mondaq (12), 20-35% CGT is applied for “physical persons at the income tax rate (progressive rates from 20% to 35% for profits exceeding Euro 60,000 per annum).
PIT
Cyprus has 0-35% PIT rate (also called PAYE) according to PWC guide (13). It’s imposed on the worldwide income of individuals who are tax residents in Cyprus. For instance, crypto salaries and nonprofessional crypto trading. Individuals who are not tax residents/not domicicle persons of Cyprus usually are not taxed on their foreign income.
1)Binance applies to deregister in Cyprus, says the focus is on ‘larger markets.’ Article
2)Crime Index by Country 2023 Mid-Year
3)List of countries by intentional homicide rate
4)List of countries by firearm-related death rate
5)IMMIGRATION, TAX, CORPORATE & REGULATORY ASPECTS OF CRYPTOCURRENCIES IN CYPRUS. Article
6) Blockchain&Cryptocurrency law and Regulations 2023 | Cyprus
8)CRYPTO ASSET SERVICES PROVIDERS (CASP). CySEC is the anti-money laundering and counter-terrorist financing (AML/CFT) supervisor for crypto-asset operations undertaken in or from Cyprus.
9)CySEC steps up supervision of crypto-assets. Article
10)Cyprus Crypto Tax for Companies and Individuals. Article
11)Corporate - Taxes on corporate income. PWC
12)Cyprus: Cyprus Crypto Tax For Companies And Individuals. Article