Is crypto legal in Cyprus?

Cryptocurrency is legal in Cyprus, but not legal tender. Businesses may choose whether to accept it. Crypto-asset service providers must register with CySEC and follow strict AML and CFT rules. EU directives and the upcoming MiCA regulation also apply.

Crypto taxes in Cyprus

Crypto transactions in Cyprus are taxed depending on how the activity is classified. Internal directives, existing tax law, and EU rulings guide the tax treatment.

• Income nature. Profits from buying and selling crypto with the intent to trade are taxed as income. Companies pay 12.5% (and it’s expected to increase to 15% in 2026), while individuals pay on a sliding scale of 0%-35%.
• Capital nature. Holding crypto for passive income, such as staking, may be viewed as capital in nature and not subject to tax, depending on individual circumstances. However, this interpretation is evolving and should be confirmed with a tax advisor.

VAT. No specific VAT applies to cryptocurrencies. The European Court of Justice ruling C-264/14 (Hedqvist) confirmed that exchanges of Bitcoin for fiat are VAT-exempt, as Bitcoin is treated like currency rather than a commodity.

As of 2025, Cyprus does not charge capital gains tax on the sale or exchange of cryptocurrencies, in line with its policy on other capital gains.

For official information, refer to the
Cyprus Tax Department’s crypto guidelines.

Crypto regulations and compliance rules in Cyprus

Cryptocurrency activities in Cyprus are regulated under national and EU frameworks, with certain services falling under supervision while others remain outside current laws. Activities such as exchanges, ICOs, and custody are regulated, while lending, borrowing, staking, and mining are not. Several authorities are responsible for oversight.

Regulatory bodies:

• Cyprus Securities and Exchange Commission (CySEC) registers, licenses, and supervises crypto-asset service providers (CASPs). It enforces AML/CFT rules and issues directives on risk and capital requirements.
• The Central Bank of Cyprus (CBC) issues warnings about crypto risks, confirms that crypto is not legal tender, and sets AML guidelines for institutions that may interact with crypto firms.
• Unit for Combating Money Laundering (MOKAS) receives and analyzes suspicious transaction reports from CASPs and enforces AML rules.
• European Banking Authority (EBA) provides EU-wide AML and CFT guidelines, ensuring consistent standards across member states.

Firms must implement strict procedures to verify customer identity, monitor transactions, and keep records in line with EU and national law.

Compliance rules for CASPs in Cyprus include:

• AML checks. CASPs must conduct customer due diligence, monitor transactions, and report suspicious activity to MOKAS.
• KYC requirements. Customer identity verification applies to transactions from €1,000. Regulators permit the use of ID copies and previously collected information.
• Sanctions screening and record-keeping. Firms must check customers against EU and UN sanctions lists and maintain full audit trails of compliance activities.
• Internal policies and registration. CASPs must create internal AML/CFT policies, train staff, cooperate with regulators, and register with CySEC in line with the EBA’s Travel Rule Guidelines.

Cryptocurrency investments involve high risk and can result in total capital loss. Prices are volatile, and past performance is not a reliable indicator of future outcomes.

Conclusion: is cryptocurrency legal in Cyprus?

Individuals and companies can trade, hold, and use digital assets within established rules. While crypto is not recognized as legal tender, the country applies EU directives and requires registration of crypto-asset service providers with CySEC. These regulations aim to establish oversight and legal clarity for crypto-related activities in Cyprus.

Disclaimer! This text is for informational purposes only. Before engaging in any cryptocurrency activity, individuals and businesses should seek advice from qualified legal and tax professionals.