Cryptocurrency is a digital asset generated to function as a means of exchange for using cryptography to close transactions and control the supplementary currency unit generation. Our company formation consultants in Cyprus can offer all the details necessary in order to open a cryptocurrency company in Cyprus.
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 which center around virtual money.
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Regulations related to cryptocurrency in Cyprus
In 2014, the Central Bank of Cyprus recognized that virtual currencies are legal, however, reminded investors about the earlier warnings on their utilization and exchange.
In the same year, the Central Bank issued warnings that virtual currencies had no guarantees for reimbursement, were therefore considered speculative, posing money laundering and other criminal activity risks.
This news appeared when the cryptocurrency volatility, mainly Bitcoin, had increased in the recent period of time.
The CySEC issued a set of regulations related to offering CFDs on cryptocurrencies. The most important one is that brokers have to cap their cryptocurrency profit to 15% of the total profit on a quarterly basis. Our experts incompany formationin Cyprus can offer more details on these regulations. We can also help investors tostart a company in Cyprus.
Cyprus hosts around 80% of the world’s retail FX and binary options corporations, which are located in the financial district of Limassol.
Recent changes in the cryptocurrency-related regulations in Cyprus
In 2017, the Central Bank of Cyprus and the Cyprus Securities and Exchange Commission have agreed on considering 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 which currently provides for the creation and authorization of cryptocurrency companies can be explained by our company registration experts in Cyprus.
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 Law and 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 the Companies 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.
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 Cyprus company formation agents can assist you in gathering these documents;
• propose a name for the company;
• submit an application for the 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.
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.
At the moment, cryptocurrencies do not fall under the Anti-Money Laundering Regulations in Cyprus, which is why they are regarded as high-risk securities; however, there are no restrictions imposed on those holding cryptocurrencies.
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 the approval for its operations. However, this requirement does not apply to IT companies conducting mining activities.
Why open a cryptocurrency business in Cyprus?
Cyprus is one of the most open countries when it comes 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 jurisdiction, 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.