Cryptocurrency businesses can complete their activities after obtaining a crypto license in Cyprus. This is one of the latest developments in the legislation applicable to Virtual Asset Service Providers (VASP) in this country.
Below, our Cypriot company formation specialists explain the procedure for applying for such a license and setting up a business in this field. You can rely on our agents if you want to open a crypto company in Cyprus.
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Registration procedure for a cryptocurrency business in Cyprus
The most popular type of legal entity in Cyprus is the limited liability company (LTD). This type of business structure can be set up by both EU and non-EU investors and is it mostly chosen by foreign entrepreneurs.
To register an LTD cryptocurrency company in Cyprus, the following steps are required:
- prepare the necessary documentation: our specialists in company formation in Cyprus can assist you in gathering these documents;
- propose a name for the company;
- submit an application for approval with the Companies Registrar;
- file the necessary documents with the Registrar of Companies;
- acquit the various fees at the Companies Registrar;
- open a corporate bank account.
| Quick Facts | |
|---|---|
| Special legislation available (YES/NO) | No, there is no special law for crypto companies, however, they must respect rules applicable to other financial businesses. |
Regulatory authority | Cyprus Securities and Exchange Commission. |
Types of entities used to register the company | The private limited liability is the preferred option for creating a crypto company in Cyprus. |
| Crypto license requirement (YES/NO) | Yes, there are 3 classes of licenses available. |
| Minimum capital requisites (YES/NO) | – EUR 50,000 for a Class 1 license, – EUR 125,000 for a Class 2 license, – EUR 150,000 for a Class 3 license. |
| Timeframe to obtain a crypto license in Cyprus (approx.) | Approx. 6 months. |
| Licensing exceptions (YES/NO) | Yes, there are also licensing exceptions. |
| Timeframe to register the company (approx.) | Approx. one week. |
| Anti-money laundering regulations applicable (YES/NO) | Yes. |
| Specific requirements for foreign investors (YES/NO) | No, foreign investors do not need to comply with specific conditions to open crypto companies in Cyprus. |
| Activities permitted for crypto companies | – crypto advice, – exchange services, – sale/offering/issuance of crypto coins, – administration/keeping custody of digital coins. |
| Other special requirements applicable (YES/NO) | Yes, such companies must have a Money Laundering Reporting Officer. |
| Taxation of cyrpto companies in Cyprus | The usual corporate tax of 12.5%. |
| Why choose Cyprus | – financial stability, – existence of specific crypto licenses based on the activities to undertake, – quick setup and licensing procedure. |
| Support in launching a cryptocurrency business (YES/NO) | Yes, you can rely on our local specialists for support in opening a crypto license. |
Also known as virtual money and digital tokens, cryptocurrencies have started to become more and more present in Cyprus, as many local entrepreneurs have become interested in using them for various transactions. This is one of the reasons the government is currently working on a set of rules under which cryptocurrencies will become a means of payment.
Foreign investors interested in setting up cryptocurrency companies in Cyprus can open various types of fintech businesses that center around virtual money.
Types of cryptocurrency businesses to be established in Cyprus
Both local and foreign investors can set up businesses in the cryptocurrency sector in Cyprus by respecting the Company Lawand the financial regulations imposed by the government and the financial authority in this country. Based on the reinterpreted legislation, one can set up various types of cryptocurrency companies, among which:
- initial coin offerings or ICOs which are very popular in Cyprus at the moment;
- IT companies which rely on cryptocurrency mining activities are also popular;
- companies which install cryptocurrency ATM machines for the exchange of digital coins;
- cryptocurrency exchanges have also started to become widely used in Cyprus;
- crowdfunding companies under which funds are gathered for the launch of cryptocurrencies.
The registration of any type of cryptocurrency company starts at theCompanies Registrar in Cyprus and follows the same steps as any other business in various industries. Our local consultants can help foreign investors during the procedure of company formation in Cyprus.
Here is also an infographic on the crypto license:
Types of crypto licenses in Cyprus
There are 3 types of Virtual Asset Service Provider licenses that can be obtained in Cyprus. They are:
- the Class 1 license, which requires a minimum capital of EUR 50,000 and is issued to provide investment advice related to crypto investment;
- the Class 2 license, for which a minimum initial capital of EUR 125,000 is needed and can be used to complete several activities, as our company formation agents in Cyprus will explain next;
- the Class 3 license, which requires the highest capital – EUR 150,000.
If you want to open a crypto company in Cyprus, the procedure for obtaining the VASP license is the same for all classes.
The Class 2 crypto license in Cyprus
Virtual Asset Service Providers in Cyprus who want to operate under this type of business permit can complete the same activities covered by the Class 1 license, plus the following:
- crypto-to-crypto and crypto-to-fiat currency exchanges;
- reception, transmission, and execution of client orders;
- financial services related to initial coin offerings (ICO), distribution, and sale of cryptocurrency;
- portfolio management;
- crypto-asset placements.
If you want to open a crypto company in Cyprus and apply for this type of license, you can rely on our local consultants for support in filing the necessary documents. If you are interested in an option to start your business quickly, our agents can help you buy a shelf company in Cyprus.
The Class 3 VASP license in Cyprus
This permit enables a Cypriot company to carry out the same activities as the first two types of licenses, as well as the following:
- administration of crypto assets;
- transfer of ownership of digital coins;
- custodian services;
- holding and safekeeping of virtual assets;
- crypto asset underwriting activities;
- operating a multilateral platform for third parties to buy and sell interests in virtual assets.
You can rely on us for support if you want to apply for this type of crypto license in Cyprus.
How long does it take to obtain a VASP license?
Obtaining a crypto license in Cyprus is subject to a straightforward process if all documents are in order. The processing phase of documents takes about 6 months to complete.
If you decide to open a company in Cyprus to set up a crypto business we recommend you discuss with us all the latest legal changes.
Other considerations on cryptocurrency companies in Cyprus
Even if Cyprus is on the good road to acknowledging cryptocurrencies for wider use than they are currently employed for, the government and the Cyprus Securities and Exchange Commission still have a lot to work on.
When it comes to the taxation of cryptocurrency companies, these will fall under the same tax regulations as any other type of business, and that is the 12.5% tax rate, which is also one of the lowest in Europe.
Once the cryptocurrency company is registered with the Trade Register, it must submit an application with the Cyprus Securities and Exchange Commission in order to obtain approval for its operations. However, this requirement does not apply to IT companies conducting mining activities.
Changes in the cryptocurrency regulations in Cyprus
The Central Bank of Cyprus and the Cyprus Securities and Exchange Commission have agreed to consider digital coins under the contracts for difference – CFD – regulations in order to offer a more favorable environment to those interested in starting businesses based on cryptocurrencies.
Under the CFD regulations, a digital token is considered legal if:
- it falls under the regulations prescribed by the Cyprus Securities and Exchange Commission related to derivatives and securities;
- if it can be considered a financial instrument, based on a thorough analysis of the same Commission;
- if it can be considered a financial contract for differences or a derivative contract for assets;
- if under such virtual coin, the provider offers an investment service based on an authorization issued by the Cyprus Securities and Exchange Commission.
At the moment, cryptocurrency companies are treated like investment funds and financial companies in Cyprus, considering they are required to undergo authorization with the Securities and Exchange Commission.
The legislation that currently provides for the creation and authorization of cryptocurrency companies can be explained by our company registration experts in Cyprus.
Here is also our video on this subject:
Why open a cryptocurrency business in Cyprus?
Cyprus is one of the most open countries to foreign investors who have extensive rights when opening companies here. The same principles apply when establishing cryptocurrency companies in Cyprus, no matter if they are required to apply for any license with the Cyprus Securities and Exchange Commission or not. Furthermore, compared to other international jurisdictions, cryptocurrency mining activities have no restrictions in Cyprus. Another advantage of cryptocurrency companies is that they benefit from the same treatment as all other Cypriot companies.
If you have more questions about cryptocurrency in Cyprus, or for assistance in setting up a company in Cyprus, please contact us. You can rely on us for customized company registration services in Cyprus no matter the field you are interested in.