Legal status of the crypto exchange Cyprus
Cryptocurrencies in Cyprus is a grey area, but in general it is not illegal, you can have a business and deal with crypto including exchanging, buying, selling, and trading.
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Cyprus cryptocurrency regulation
Cyprus Securities and Exchange Commission (CySEC) is responsible for giving an “Investment Firm License” to open cryptocurrency business, while Banking License, E-Money (Electronic Money) or Payment Institution License are provided by the Central Bank of Cyprus
Based on the legislation, the following services are subject to licensing:
- Reception and transmission of orders
- Execution of orders on behalf of clients
- Exchange of virtual currency to fiat currency
- Exchange of fiat currency to virtual currency
- Exchange of virtual currency to another virtual currency
- Participation and/or provision of financial services related with the distribution, offering and/or sale of crypto currencies, including the initial offering
- Placement of crypto assets without firm commitment
- Portfolio management
- Administration, transfer of ownership, transfer of site, holding, and/or safekeeping, including custody, of virtual currency or cryptographic keys or means enabling control over virtual currency
- Underwriting and/or placement of virtual currency with firm commitment
- Operation of a multilateral system, which brings together multiple third-party buying and selling interests in virtual currency in a way that results in a transaction
Requirements for the authorized capital of the company depending on the services:
50 000 EUR – (Only to provide investment advice services)
125 000 EUR – (Investment advice services and 1-8 services from the list)
150 000 EUR – (All services from the list including Investment advice)
The minimum number of employees who should be in the company:
- 2 (two) Executive directors
- 2 (two) Directors
The directors must be approved by CySEC on their knowledge, and experience in the field and must satisfy the fit and proper test of CySEC. At least two directors should be Cypriots.
Required documents to obtain the license:
1. Copy of passport
2. Proof of address (Utility Bill; Driver’s License; Bank Statement)
3. Power of attorney
4. Non-Criminal record for shareholders
There are many agencies that can help to obtain licenses, one of the agencies offers is the following:
Total cost for the project: 49 700 EUR
Includes:
- Company formation with mandatory state fees and contact person
- Documents delivery
- Legal address for 1 year prepaid
- Accounting services for 1 year prepaid
- Assistance with opening account in crypto-friendly bank
- Drafting all required documents required for applying for the crypto license
- Mandatory fees for the crypto license
- Preparation of Anti-Money laundering policy and documents according to the new guidelines
- Preparation description of Internal control mechanism
- Representation in the registration process
- Assistance with searching and hiring required employees with relevant education and experience
- Legal assistance with the project
Estimated duration of a project:
- Company formation – 2-3 weeks
- Crypto License obtainment – around 6 months (depends on Covid-19)
Maintenance from second year – 8 590 EUR / annual
- Annual renewal for the license
- Legal address rent
- Accounting services
Is a license needed to run business
An opening of a cryptocurrency exchanger in Cyprus, is a promising business project, but it is necessary to fulfill some requirements. The Republic is open to the blockchain, but in terms of licensing and currency activities regulation, it is guided by the Directives of the European Union. The exchangers are obligated to inform users about the crypto risks, instability of the non-fiat currencies rate of exchange.
Licenses for cryptocurrency are issued and controlled by the CySEC and Cyprus Central Bank. To work within the Republic and enter the European & global market, you will have to:
- Pass an inspection of the Cyprus Central Bank – provide a business plan on request, letters of recommendation from servicing banks, from counterparties having a confirmed reputation.
- Register an enterprise in Cyprus as a supplier of financial services – with a “physical” office, share capital and bank account for its placement.
- Hire directors with education and experience in the financial sector and full-time employees.
- Provide the regulator with documentation on the organization, written provisions for a cryptocurrency license – internal control instructions, policies to prevent money laundering and to prevent the personal information leakage.
- Prepare technical tools for operation, for compliance with AML standards and provide the regulator with their descriptions.
The Cyprus license for the cryptocurrency exchange gives a right to work in the EU area.
Crypto mining Cyprus restrictions
When the Crypto mining license is issued, then you can sell crypto to individuals or to companies or to different entities using any type of payment without any problems.
Taxes in Cyprus
Yes, every transaction even if it is cryptocurrency transaction should be recorded and audited/accounted for. You should use a reputable provider for your bitcoin transactions. One that can provide a statement against FIAT currency for your Accountant/Auditor.
Cryptocurrencies declare income
Income tax rate equals to 12.5% (One of the lowest rates within the European Union). Every profit income should be declared, there should be a Liaise with a local Accountant to ensure that you are being paid in a way that will allow you to avoid any potential issues.
Cryptocurrencies business sphere
In Southern Cyprus (Greek part), rare to see shops or cafés accepting crypto payments, but the mentality is beginning to change, nowadays you begin to see shops introducing crypto payments, for example a restaurant in Nicosia announced that it is accepting payments with cryptocurrencies, its name is Think 30, located on Stasikratous Street in Nicosia, announced it is now offering its customers the option of paying with cryptocurrencies if they wish.
While in Northern Cyprus, you see many shops (especially the jewelry shops) and cafes accepting the bitcoin payments.
Crypto ATM in Cyprus
There is no bitcoin ATM we know of in Cyprus, but in 2017 a Fintech company (Hello group; https://hello-group.live) introduced an ATM machine to purchase bitcoin. The company said the machine provides users a way of purchasing Bitcoin in a simple and secure way. It is directly connected to top worldwide cryptocurrency exchanges “in order to provide the best possible prices on the market”.
The ATM is set up in the Pitta & More café-restaurant under Hello Group’s Limassol office. All a buyer needs to buy bitcoin with the machine is to scan their wallet’s QR code. The machine offers a direct wallet download by means of a QR scan with a smartphone.
Alternative methods to buy crypto in Cyprus
To buy or sell bitcoin in Cyprus, you have 2 options, even anonymously or non- anonymously.
Non anonymously
You can use the Coinbase pro platform (coinbasepro.com), very cheap and very low fees, to purchase your cryptocurrencies, you just transfer the Euros or dollars to Coinbase bank account, and you buy crypto. The same way, if you have crypto, you can transfer them to Coinbase pro and buy Euros or dollars, and you withdraw the money directly to your bank account.
If you do not want your bank to know that you transferred money to a crypto platform, you can transfer your money to a third-party application as Revolut which is a banking application, and from Revolut you can directly buy bitcoin on Coinbase pro. You can download the app directly from the website (Revolut.com)
The second way is to buy bitcoin through the bitcoin ATM machine in Limassol through Hello group company.
Anonymously
There are different ways to Buy/Sell crypto in anonymous way in Cyprus
Peer to peer
You can contact people who have crypto, and you buy crypto directly from them, you can use a website called localbitcoins.com and bisq.com to find such people. Or if you know someone you can trust, and he can buy your bitcoin, it will be a good option.
Buying goods
You can sell your crypto in north Cyprus in jewelry shops and buy gold with your crypto.
Also you can sell your gold in exchange of bitcoin, and it is a good option to buy bitcoin with gold.
Amazon gift cards
The best way to buy crypto anonymously is to buy Amazon gift card from amazon. Buying an amazon gift card from amazon is very easy, purchasing gift cards is not traceable and it allows you to use this gift card to buy different types of crypto.
Once you bought the gif card, you can use paxful.com to sell this gift card with bitcoin, all you must do is choose a bitcoin seller and upload your card to Paxful.com, once your card is validated, then Paxful.com sends you the bitcoin.
ipayyou.io
Ipayyou.io website is the best choice to buy bitcoin anonymously, you just buy e-gift cards from amazon, ebay or Walmart, and you send these gift cards to ipayyou, and in return they pay you in crypto digital currency, very easy, reliable, and very anonymous, they do not require any ID identification.