Crypto Licence in Cyprus
Private Financial Services has been helping in obtaining different licences in Cyprus for more than 10 years. If you would like to get your crypto licence in Cyprus, you are in the right place!
Cyprus Security and Exchange Commission, or “CySec,” brought the Directive (269/2021) into effect on the 25th of June 2021. It relates to the business listed as Cryptocurrency providers (Crypto-Asset Services Providers, “CASPS”) pertaining to Article 61E, Section 2 of the Prevention and Suppression of Money Laundering and Terrorist Financing Law, L188(I)/2007, referred to as the “AML LAW.” Having been changed towards the start of the year through the “Amending Law,” L13(I)/2021, it was done so with the purpose of instilling peace between local regulations surrounding that which was imposed by the 4th and 5th AML Directives: Directive (EU) 2015/849 and Directive (EU) 2018/843. By following the steps for receiving a crypto license, Cyprus moved towards entering the market.
Advantages of Having Crypto Licence in Cyprus
Legislation and supervisory authority
Cyprus has transparent and predictable legislation that provides clear and understandable rules of the “game”. CySec has extensive, many years of experience in the regulation of brokerage companies, and its requirements and expectations are understandable.
Convenience
Cyprus is a great place for doing crypto business. The island has formed its own ecosystem of the crypto community, traders, brokers and financiers. Also, there will be no problems with finding qualified specialists. Cyprus often hosts specialized forums that bring together entrepreneurs from all over the world.
Current Account and Crypto License
Having received a crypto-license in Cyprus, you have a chance to open an account in one of the Cypriot banks. This option is not available in many European jurisdictions, even with a license.
Tax Policy
Cyprus is famous for its tax rates and convenient tax regime. The payment of taxes on profits and dividends can be optimized much more efficiently than in other EU countries.
Types of Crypto Licences and Starting Capital Needed
Class 1
Starting Capital requirement: Euro 50 000. Required for CASPs investment advisors.
Class 2
Class 2 Starting Capital requirement: Euro 125 000.
For CASPs who offer investment advice as well as other services such as:
- Receiving and distributing orders to clients
- Successfully delivering orders to clients
- Trading between crypto and fiat currencies
- Trading crypto assets
- Involvement in and/or supply of financial services pertaining to the delivering, providing, and/or trading of crypto assets, notwithstanding the start-up investment
- Offering crypto assets with trading options
- Managing, organizing, and presenting arrangements
Class 3
Starting Capital requirement: Euro 150 000.
CASPs offering investment advice in conjunction with Class 1 or Class 2 services, or:
- Distribution of ownership, site changes, administration and/or security of assets from key-keeping to crypto asset ownership and autonomy over cryptography
- Flexible trading options for crypto assets owned
- Use of multi-lateral, dynamic operations comprised of several trading services for the purchase and selling of assets, leading to successful trading
What’s Needed For Receiving a Crypto Licence in Cyprus
- Particular stipulations must be put in place and met by the Memorandum of the Company relating to business operations
- The starting capital requirements must be met by the business applying for the license
- Business dealings are operated within an office located in Cyprus
- One director or more must live in and have the official status of residency in Cyprus and be in charge as an Executive director as per the requirements of the ‘fit and proper test’ which they must first complete
- CySEc requires that the business has particular regulations established that covers areas including contingency plans, conflicts in agreements, client security, server protection, etc.
- The inclusion of shareholders that have completed the ‘fit and proper test’ and background screening has been carried out. This ensures that they have no past history of criminal activities, they have the right expertise, and are a fit for the role
- Internal regulations must comply with CySEC standards to ensure that possible disagreements with clients won’t occur
- All businesses that obtain a crypto license are bound by the laws of CySEC and must follow them with intent. This includes refraining from money laundering acts, while upholding Know Your Client policies effected and that is required from the company.
- Regulations require that a CASPS business in Cyprus needs a minimum of two Executive Directors, two Non-Executive Directors, and four Directors. In order to become an Executive Director, one must complete the ‘fit and proper test’ to hold the status of residency in Cyprus. The requirements that must be met include experience working in the financial sector, having no criminal convictions, and being highly esteemed within business.
How to Apply for a Crypto Licence
An application should include many different documents (due diligence documents, policies and procedures, statutory documents)
- Business reports and files, including certifications of secretary and directors, list of shareholders, certification of incorporation, addresses, Memorandum of the Company, etc. must be provided along with the application form
- The whole process should take from one to two months to be completed, from the beginning of the application to the processing of all relevant documentation. But in practice the whole procedure will take up to 6-8 months.
- Additional documents must be assessed such as files relating to internal operations, anti-money laundering acts, Know Your Client policies
- CySEC compiles all of the application along with supporting documents
- A six-month time frame is given for CySEC to accept or reject your crypto license application
Our Lawyers will Help You with:
Preliminary analysis of the business model;
Full support in establishing a company and substance;
Assistance in the development of internal policies and procedures;
Full support in obtaining a crypto licence in Cyprus;
Submission of all documents and applications, interaction with CySec;
Legal address for the company. If necessary, assistance in finding a separate office and hiring qualified personnel;
Payment of all state, notary fees and charges;
Legal and accounting advice.