Cyprus Cryptocurrency License in 2026 

Cyprus Cryptocurrency License in 2026

• We assist international companies in obtaining a cryptocurrency license (CASP) issued by the Cyprus Securities and Exchange Commission (CySEC) under the 2026 MiCAR regulations. At Tetra Consultants, our team of lawyers, licensing specialists, compliance team, and accountants ensures that entrepreneurs receive end-to-end support in obtaining a cryptocurrency license in Cyprus, including company incorporation in Cyprus, opening corporate bank accounts in Cyprus, appointing company secretaries, opening offices in Cyprus, and submitting the application to the CySEC. We ensure compliance with the local residency requirements for directors and AML/CFT regulations for smooth cryptocurrency business operations. 

What are the laws governing a Cyprus Cryptocurrency License in 2026?

Markets in Crypto-Assets Regulation (MiCAR):  

• This Markets in Crypto Assets Regulation (MiCAR) is applicable to all European Union jurisdictions. It is implemented by June 2024. The final version is expected to be enforced in December of that year.  

• All member states of the European Union should start enforcing these regulations on crypto-licensed businesses operating within Europe from this implementation date. Then, the full extent of MiCAR will make itself evident over the course of the next 18 months, targeting December 2025, at which point EU countries will harden their demands and set requirements. 

• The EU’s comprehensive crypto-assets regulation, fully operational since 2026, requires CASPs dealing in exchange services, custodianship, wallets, and trading platforms to be authorized by CySEC.  

• MiCAR provides a unified licensing framework for all member states, covers consumer protection, stablecoins, and prevents market abuse by replacing fragmented national VASP registrations with a unified passporting regime for all EU member states. 

Prevention and Suppression of Money Laundering Law (AML/CFT): 

• Cyprus’s national AML/CFT legislation for crypto businesses, in compliance with the EU’s 5th/6th AML Directive package, requires robust KYC/AML measures from crypto businesses. Licensees must appoint a resident MLRO, monitor transactions, report suspicious transactions to FIU, and maintain a 5-year audit trail, with CySEC imposing fines up to €350,000 on violators. 

CySEC Circulars (e.g., C417):  

• CySEC prudential directives establish capital requirements (min €125,000 – €150,000), risk management practices, cybersecurity measures, and fitness checks for directors/shareholders. CySEC authorizes crypto services through investment firm models, including reporting obligations, stress testing, and client asset segregation. 

Investment Services and Activities Law:  

• The legislation transposes MiFID II for crypto services, including local substance requirements, corporate governance arrangements, IT systems, and compliance infrastructure. CySEC carries out pre-authorization inspections and annual audits for operational integrity and investor protection. 

Tax Implications of Cyprus Cryptocurrency License (CASP) in 2026 

Corporate Income Tax: 

• A standard rate of 15% on worldwide profits, compared to 12.5% previously, with an 80% exemption under the IP Box regime, equalling a reduced rate of 2.5%. In addition, a new regime eliminates dividend tax for 17 years. 

Crypto Disposal Tax:  

• A flat rate of 8% under Article 20E of the Income Tax Law on crypto sales, swaps, spending, and donations, applicable to both companies and individuals, effective from 1st January 2026, with no loss offsetting against other forms of income. 

VAT:  

• A standard rate of 19% applies, with a possible 9% reduced rate applicable to financial advice under the MiCA regime, applicable to crypto exchanges and custody services, which are exempt as financial services. 

Payroll and Social Insurance:  

• A progressive income tax of 13-35% applies to local staff, while employer contributions of 8.8% social insurance and 4% redundancy fund are applicable to required directors and employees of companies. 

Our tax experts are adept at optimizing IP Box structuring as well as crypto tax compliance filings under the new 2026 regime. 

Who is a Crypto asset service provider?

• Under MiCAR, a CASP engages in crypto-fiat exchange, crypto-crypto exchange, custody or safekeeping, wallet services, or ICO distribution. CASPs in Cyprus, where all CASPs are required to register with CySEC to operate in or from Cyprus, notify CySEC with proof of home state AML/CFT registration for EEA CASPs, or directly for non-EEA CASPs. Post-July 2026, MiCAR grandfathering will no longer require all crypto services to be authorized by CySEC for Cyprus residents. 

Reverse Solicitation Under MiCA 2026

• In the latest MiCA system fully in force in 2026, reverse solicitation with EU clients directly engaging non-EU CASPs without prior marketing efforts is heavily curtailed under the latest CySEC rules for MiCA.  

• The exemption now requires exclusive client-driven services with zero provider targeting, solicitation, or geo-unblocking (even VPNs violate). CySEC monitors through IP records, payment records, and complaints, with fines of €700K+ for non-compliance.  

• It finally closes the VASP loophole for legacy services, with only true reverse solicitation of EU clients qualifying and requiring full licensing for active marketing efforts. 

What services can be offered with the Cyprus Cryptocurrency License?

According to the regulator, financial services regarding the distribution, offer, and/or sale of crypto assets are: 

• Receiving and transmitting instructions, 

• Execution of orders on behalf of customers, 

• Dealing on own account, 

• Portfolio management, 

• Provision of investment advice, 

• Underwriting and/or placement of crypto-assets on a firm commitment basis, 

• Placement of crypto-assets without a firm commitment basis, 

• Operating of a multilateral trading facility for buying and selling crypto-assets. 

What are the categories of Cyprus Cryptocurrency License? 

• When it comes to the authorization process, there are 3 different levels of authorization. The basis for their definition is the scope of crypto asset services provided by the company. Accordingly, all three levels of authorization are subject to varying capital requirements. 

Class 1 license 

• This category includes CASP, which provides investment advice.  

• Capital requirement: €50,000 

Class 2 license 

• The CASP, which falls into this category, is authorized to provide services included in a class 1 license, plus the following range of cryptographic asset services: 
  • Exchange between cryptographic assets and/or exchange between cryptographic and fiat currencies 
  • Placing cryptographic assets without a fixed liability 
  • Receiving and executing customer orders (including performing on behalf of clients) 
    Crypto portfolio management 
  • Participation or provision of financial services related to the distribution, supply, and/or sale of cryptographic assets (including the original offer) 

• Capital requirement: €125,000. 

Class 3 license 

• The CASP, which falls into this category, is authorized to provide services included in Class 1 and Class 2 licenses, plus the following range of cryptographic asset services: 
  • Underwriting and/or placing crypto assets with a firm commitment 
  • Administration, transfer of ownership, transfer of site, storage, and/or storage (including storage) of operations related to cryptographic assets, cryptographic keys or cryptographic asset controls 
  • Functioning of a multilateral system that brings together multiple third parties to buy and sell interests in crypto assets in a way that leads to a transaction. 

• Capital requirement: €150,000. 

Cyprus cryptocurrency license requirements in 2026

• Incorporate a Cyprus entity with a Board of Directors with at least 4 directors, of which 2 are Executive Directors. 

• Directors must be approved by CySEC and meet the fit and proper criteria based on their knowledge and experience. 

• Establish a fully functional office in Cyprus with staff employed on a full-time basis to perform key company functions. 

• Provide a detailed organizational chart as part of the requirements for MiCA regulatory compliance. 

• Establish a Head of Operations (HoO) role for day-to-day trading, settlement, and IT functions with at least 3 years of experience in the crypto space and pre-approval by CySEC. 

• Establish a Risk Manager role for managing liquidity, market, and cyber risks, as well as for developing the ICARA process and quarterly reporting to the board. 

• To maintain an internal audit function for annual independent compliance audits and provide MiCA Pillar III disclosures and report to the board or audit committee. 

• To implement policies for AML and CFT in accordance with the Law and Directive for the Prevention and Suppression of Money Laundering and Terrorist Financing. 

• To establish proper internal control mechanisms for the smooth running of the company’s business. 

• To maintain proper governance with transparent reporting lines. 

What is the procedure for obtaining a cryptocurrency license?

In order to set up and operate a cryptocurrency venture in Cyprus, you need to be duly registered as a financial service provider in the nation. The requirements and procedures to be undergone heavily rely on the business needs and goals of your company. Tetra Consultants has summarised the most prevalent steps followed when attaining a Cyprus Cryptocurrency License.