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Crypto Exchange License in Cyprus

Crypto Exchange License in Cyprus – Obtaining a Cryptocurrency License

Our law firm can assist with the incorporation, legal support and regulatory licensing of Crypto Exchanges in Cyprus. Our experience and competence allows your business to comply with EU Laws. 

We have deep knowledge of Cypriot and European legislation and are happy to share with you our unique experience in obtaining licenses for Crypto Exchange Offices, Cryptocurrency Exchanges and ICO projects.

Registration of Crypto-Asset Providers in Cyprus

Cyprus initially introduced its Crypto Asset Service Providers (CASP) framework in June 2021 under local anti-money laundering (AML) legislation. Under that regime, interested applicants registered with the Cyprus Securities and Exchange Commission (CySEC) to provide crypto services in compliance with the Prevention and Suppression of Money Laundering and Terrorist Financing Laws of 2007–2021.

However, in line with the EU’s broader crypto regulation initiatives, MiCA (Markets in Crypto-Assets Regulation) has replaced the local CASP framework. From 17 October 2024, CySEC ceased accepting applications under the local regime. A preliminary phase for MiCA applications began on 13 November 2024, allowing prospective CASPs to submit draft applications in anticipation of MiCA’s full commencement date of 30 December 2024. Since then, new crypto-asset service providers in Cyprus must apply for authorisation exclusively under MiCA.

Local CASP Regime and the Move to MiCA.

Under MiCA, entities offering crypto-asset services—such as the exchange, custody, or transfer of crypto assets—must seek authorisation in their home EU Member State. For Cyprus, CySEC is the competent authority responsible for overseeing applications, supervising ongoing compliance, and protecting investors’ interests.

Before MiCA, service providers established in the EEA (European Economic Area) and already registered for AML/CFT (Anti-Money Laundering/Countering the Financing of Terrorism) purposes with another EEA authority could notify CySEC if they operated in or from Cyprus. Under the new MiCA regime, those providers may still rely on certain passporting rights once authorised in one EU Member State, but they must ensure compliance with MiCA authorisation requirements for all services they provide and keep CySEC informed if Cyprus is part of their operational scope.

New market participants intending to offer crypto services in or from Cyprus must now prepare and submit their application under MiCA to CySEC before commencing operations. Existing businesses that had been active under the local CASP regime must transition to MiCA, ensuring full compliance with the new regulatory framework and all relevant AML/CFT provisions.

Under MiCA, a “Crypto-Asset Service Provider” (CASP) is defined as any legal person or entity whose occupation or business involves providing one or more of the following services to third parties on a professional basis:

  • Custody and administration of crypto-assets on behalf of clients;
  • Operation of a trading platform for crypto-assets;
  • Exchange of crypto-assets for fiat currency or other crypto-assets;
  • Execution of orders for crypto-assets on behalf of clients;
  • Placement of crypto-assets;
  • Reception and transmission of orders for crypto-assets;
  • Providing advice on crypto-assets;
  • Portfolio management of crypto-assets;
  • Providing transfer services for crypto-assets on behalf of clients.

Why Choose Cyprus for Your MiCA License?

Cyprus stands out as a premier destination for establishing a CASP under MiCA. The island’s progressive regulatory framework, competitive tax environment, and thriving fintech sector make it an ideal launchpad for companies looking to expand throughout the European Union.

With MiCA now fully in force, securing a CASP license in Cyprus grants seamless market access to over 450 million consumers across the European Union. Backed by the CySEC’s reputation for clarity and innovation in its oversight, license holders benefit from a well-structured, future-ready regulatory ecosystem.

MiCA “Passporting” Advantage

One of MiCA’s key benefits is its single licensing regime. Once authorised in any EU Member State, CASPs can offer services across the entire European Union without having to apply for additional licenses. This streamlines operations, cuts costs, and accelerates market entry for crypto businesses.

Strategic Business Incentives in Cyprus

Beyond regulatory advantages, Cyprus offers a compelling business environment for CASPs. The country boasts a corporate tax rate of just 12.5%, one of the lowest in the EU, alongside a wide network of double taxation treaties that enhance cross-border efficiency.

Coupled with a highly skilled, multilingual workforce and a strategic geographic position bridging Europe, Africa, and Asia, Cyprus provides a cost-effective and globally connected base for crypto firms aiming to leverage MiCA’s opportunities.

Type of License, Capital Requirements and Time Frame

MiCA groups CASP licences by the types of services offered and assigns permanent minimum capital requirements. In Cyprus, these classes and capital thresholds align closely with the previously established categories.

Class Services Min. Capital
Class 1

CASPs authorised for one or more of the following:

  • Execution of orders on behalf of clients;
  • Placing of crypto-assets;
  • Providing transfer services for crypto-assets on behalf of clients;
  • Reception and transmission of orders for crypto-assets on behalf of clients;
  • Providing advice on crypto-assets; and/or
  • Providing portfolio management on crypto-assets.
EUR 50,000
Class 2

CASPs authorised for any Class 1 service(s) and any of the following:

  • Providing custody and administration of crypto-assets on behalf of clients;
  • Exchange of crypto-assets for funds (fiat currency); and/or
  • Exchange of crypto-assets for other crypto-assets.
EUR 125,000
Class 3

CASPs authorised for any Class 2 service(s) and:

  • Operation of a trading platform for crypto assets
EUR 150,000

Beyond the minimum capital requirements, MiCA mandates that CASPs maintain prudential safeguards equal to the higher of:

  • The minimum capital requirement for their class (as listed above), or
  • One-quarter of their fixed overheads from the previous year, reviewed annually.
  • Fixed overheads include ongoing operational costs (e.g., rent, salaries, utilities) but exclude variable costs. This ensures CASPs have sufficient liquidity to cover operational risks.

CASPs must hold these reserves in the form of own funds, which can include Common Equity Tier 1 (CET1) capital (e.g., equity shares or retained earnings) or insurance policies covering operational risks, provided they meet MiCAR’s standards. This flexibility allows firms to adapt their financial strategies while ensuring client protection.

Application Procedure

To initiate the authorisation process for establishing a cryptocurrency exchange or broader crypto-asset services business in Cyprus under MiCA,  a comprehensive application file must be prepared.

Under Article 62 of MiCA, a CASP application requires:

  • General Information: Legal name, address, contact details, domain name, and incorporation documents.
  • Services Provided: Specification of MiCA-defined services (e.g., custody, trading platform operation, crypto-to-fiat or crypto-to-crypto exchanges, advice, etc.).
  • Governance Arrangements: Organisational structure, management qualifications, and evidence of directors’ crypto expertise.
  • Prudential Requirements: Compliance with Article 67, including minimum capital or insurance (see above).
  • Business Plan: Detailed plan with financial projections and capital calculations.
  • Policies and Procedures: Risk management (including AML/CFT), complaints handling, business continuity, and conflict of interest policies.
  • Program of Operations: Description of services, target markets, and marketing strategies.
  • Security Measures: ICT systems, cybersecurity protocols, and technical documentation.
  • Client Asset Protection: Procedures for segregating and safeguarding client funds and crypto-assets.
  • Service-Specific Details: Operational rules (e.g., trading platform policies, custody arrangements, pricing methodologies).

Under MiCA’s timelines, once CySEC deems an application complete, it must decide on authorisation within 40 working days.

CySEC first acknowledges receipt within five working days and then has 25 working days to determine whether the application file is complete. When the file is confirmed as complete, the formal 40-day authorisation assessment begins.

This process can be more efficient than the old local regime’s six-month assessment window, provided the application and supporting materials are well-prepared.

Requirements for Obtaining and Maintaining Authorisation

Applicants seeking to become licensed crypto-asset service providers in Cyprus under MiCA must meet certain legal, managerial, and operational conditions:

  • Corporate Substance: The company must be incorporated in Cyprus and maintain a fully operational office there. This implies that local staff should be employed on a full-time basis and that the firm’s key functions—such as compliance, risk management, and AML—are performed from Cyprus
  • Governance Arrangements: The Board of Directors should consist of at least four members, with at least two executive directors who satisfy CySEC’s “fit and proper” criteria. Management body members are assessed on their expertise and reputation, reflecting MiCA’s emphasis on strong corporate governance.
  • AML/CFT Framework: Applicants must demonstrate compliance with both Cypriot AML Law and the additional provisions mandated by MiCA. Detailed AML and KYC policies, combined with effective transaction monitoring and client due diligence measures, are necessary.
  • Internal Controls and Risk Management: CySEC requires applicants to establish clear reporting lines, a risk assessment framework, and robust internal controls. These must cover not only financial and operational risk but also ICT and cybersecurity risk, given the technical nature of crypto-asset services.
  • Capital Adequacy: Applicants must hold the minimum capital corresponding to their license class (EUR 50,000, 125,000, or 150,000). This capital must generally be paid-up or backed by an insurance or comparable guarantee where permissible.
  • Clear Business Model and Operations: The applicant should provide detailed explanations of its business plan, commercial strategy, and operational procedures, including how it intends to offer its services, the nature of the crypto assets involved, and any relevant partnerships.

CySEC Application Fees

Under MiCA, the fee for examining a CASP application in Cyprus is EUR 10,000, which is non-refundable if the application is ultimately declined. Upon successful authorisation, no extra fee is charged for the initial year, but a EUR 5,000 renewal fee applies annually thereafter.

Licensed entities must maintain ongoing compliance with MiCA and local AML/CFT legislation. This includes continuous monitoring of operational activities, regular reporting to CySEC, adherence to capital requirements, prompt updates regarding any changes in corporate structure, and cooperation with regulatory inspections. Firms are also expected to remain vigilant regarding industry-wide developments, especially in cybersecurity and new technological solutions related to crypto assets.

How Our Law Firm Can Assist

We offer comprehensive support for MiCA compliance in Cyprus:

  • Corporate Structuring: Company setup, governance drafting, and substance compliance.
  • Application Support: Preparation and submission of MiCA applications and policies.
  • AML/CFT Frameworks: Tailored compliance solutions for MiCA and TFR obligations.
  • Ongoing Support: Reporting, audits, and regulatory updates.

With our expertise in Cypriot and EU law, we empower crypto businesses to succeed in the MiCA era. Contact us to launch or transition your crypto exchange in Cyprus today.

Registration of Crypto-Asset Providers in Cyprus

See how our lawyers can help you with your Crypto Exchange License.