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Crypto Exchanges& Regulation in Cyprus

Top exchanges in Cyprus by Coincub criteria
Article review author
Jonathan Lea
Cyprus head image

Crypto Country Rating: 6.6/10

6/10
Institutional acceptance
Sectors looking for government leadership
8/10
Exchanges & Wallets availability
Leading names available with high presence and access
8/10
Government regulation
No regulatory framework – but new legislation imminent
5/10
Defi acceptance
Not currently in consideration
6/10
Financial services
Securities and Exchange Commission creating a crypto idea-sharing hub
7/10
Transparency
Personal data collection and firm company registration – but low tax for registered companies
6/10
Spending crypto
Cyprus has a number of local and overseas brands outlets to spend crypto on products and services
7/10
Banks activity in crypto
Leading banks looking for a legislative strategy.

Bitcoin and crypto trading in Cyprus

Digital currency trading and taxes in Cyprus

Cyprus has a number of local and overseas brands outlets to spend crypto on products and services. LocalBitcoins.com is always an option too. Buy and sell Bitcoin for a wide range of payment methods, from gift cards to bank transfers. LocalBitcoins is a peer-to-peer (P2P) exchange, where you buy and sell with another individual. Finally, crypto.com has begun shipping the Visa Cards to Cyprus, making spending crypto seamless.

Gifting Crypto

You won’t be able to reduce your tax by gifting your cryptocurrencies. Whatever gain you have made on it will be taxable up to the point at which you gift it.

Law and crypto trading in Japan

The Cypriot government pays special attention to the regulation of crypto-assets and has formed an ad hoc working group to develop and implement blockchain technology. The Cyprus Securities and Exchange Commission (“CySec”) has been appointed as the supervising authority over the compliance of Crypto Asset Service Providers with the AML Law. CySec issues directions with their obligations and imposing sanctions in case of a breach. Bitcoin and other cryptocurrencies are not deemed to be foreign currency and achieving a framework that governs crypto and also the adoption of blockchain technology in some form is high up the agenda for the Cyprus government. The Cyprus Securities and Exchange Commission looks to act as a platform for crypto entities – regulated and unregulated – to share ideas and business service models between crypto companies with the goal of creating standardized consumer protection.

Legal Latest

Changes in regulation?
Positive moves are underway to achieve a comprehensive legal strategy. Currently, there are no prohibitions on crypto trading except for the strong guidance from the Central Bank of Cyprus and The Cyprus Securities and Exchange Commission about the potential high risks of trading – this advice applies to individual investors and to professional investment bodies.

Taxing cryptocurrencies in Cyprus

Cryptocurrency tax for Country residents

Income tax can be as high as 35% on earnings and this applies to crypto gains through trading and lending. Forming a company to trade however brings tax down to around 12.5% and expenses are deductible which is why Cyprus has an attraction for such companies from overseas setting up a tax residency.

Tax Relief

Cyprus has a middling income tax rate of 35% on gains from crypto but this reduces greatly for registered companies trading crypto.

Tax when moving residency

Tax breaks are very good for a company located in Cyprus. As an individual, however, moving abroad and relocating your tax affairs abroad means you’ll be eligible to pay the tax of that country.

Tax for Mining

Mining is outside of the scope of most individuals – requiring considerable investment in time and money. A tax of 35% on mining gains will apply but reduces for a registered company.

Crypto financial services in Cyprus

Fin services/retirement account

No moves to allow or encourage retirement planning in crypto and digital assets are on the horizon.

Fin services/Banking interest

The treatment of cryptocurrency although not prohibited, still faces barriers from commercial banks, under the scrutiny of the Central Bank of Cyprus.

Fin Services/DeFi

Decentralized Finance is not on the agenda although the blockchain technology behind the rapid interest and growth of crypto is coming within Cyprus’s forthcoming attempts to regulate the industry.

Crypto regulation in Cyprus

Security

The Crypto Asset Service Providers that offer services either to exchange, sell crypto assets/fiat currencies or act as participants, managers, provisioners of financial services related to the distribution, offering, or selling of crypto assets from or in Cyprus – must be registered in a registry to be kept by CySec. As yet, however, when you deal with a crypto exchange, the responsibility is very much on you to check the exchange and satisfy yourself that it offers some comeback in the form of insurance against hacking or fraud. Many of the established exchanges do have some form of cover. However, as a rule, in Cyprus, the position from the authorities is that you need to be aware that there are no legal obligations for reimbursement of lost or stolen cryptocurrencies.

Transparency

You’ll have to declare your ID when dealing with any recognized or reputable exchange. As regards to tax, you’ll be up for 35% on your gains so record keeping is paramount.

Helpful?
FAQ

New to crypto? Here’s our guide!

FAQ Image #1 01 Why Bitcoin? It seems like the buzz around Bitcoin just keeps growing. Bitcoin is a constantly evolving technology with a passionate community. What is it about the digital asset that makes it such a controversial topic and attractive investment?
FAQ Image #2 02 How to Get Started with Bitcoin It can be difficult to get past the technical jargon surrounding bitcoin (BTC) and other cryptocurrencies in order to figure out how you can buy and store them. Beginners can purchase Bitcoin, for example, on many exchanges using fiat currency like U.S. Dollar, Euro or British Pound.
FAQ Image #3 03 Blockchains 101 Blockchains are a type of database where data is stored in blocks that are chained together. As new data comes in, it is entered into a block, which is then chained to the previous block. The Bitcoin blockchain serves as a ledger that records every Bitcoin transaction in history.
FAQ Image #4 04 Bitcoin in the Real World Ok - you’ve found an exchange, bought your Bitcoin, and stored it safely. What’s next? By now you can buy just about anything with Bitcoin if you try hard enough, from Amazon gift cards to an old master painting. You can also convert your BTC to fiat with ATMs, an exchange, and more.

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