{"id":118196,"date":"2025-11-10T10:30:16","date_gmt":"2025-11-10T10:30:16","guid":{"rendered":"https:\/\/my.legal500.com\/guides\/?post_type=comparative_guide&#038;p=118196"},"modified":"2025-11-10T14:17:29","modified_gmt":"2025-11-10T14:17:29","slug":"cyprus-blockchain-crypto-assets","status":"publish","type":"comparative_guide","link":"https:\/\/my.legal500.com\/guides\/chapter\/cyprus-blockchain-crypto-assets\/","title":{"rendered":"Cyprus: Blockchain &#038; Crypto Assets"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-118196","comparative_guide","type-comparative_guide","status-publish","hentry","guides-blockchain-crypto-assets","jurisdictions-cyprus"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">KINANIS LLC<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2020\/10\/kinanis.jpg\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">KINANIS LLC<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2020\/10\/kinanis.jpg\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Blockchain &#038; Crypto Assets laws and regulations applicable in Cyprus<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please provide a high-level overview of the blockchain market in your jurisdiction. In what business or public sectors are you seeing blockchain or other distributed ledger technologies being adopted?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Cyprus government published its National Blockchain Strategy (\u201cNBS\u201d) in May 2019, with the core aim to promote the development of the blockchain technology through innovation and the cooperation of the public and private sector. The government collaborated with various entities, both in the public and private sector, in order to identify the needs of the market and committed to implement the NBS, in order to enter into the new era of digitalisation. Further, Cyprus has signed the European Blockchain Partnership and the \u2018Declaration of the Southern Mediterranean Countries on Distributed Ledger Technologies to empower the cooperation with parties abroad.<\/p>\n<p>Blockchain is mainly popular in projects of the financial services market, including among others, crypto-related projects. Currently, there are nine crypto-asset service providers registered with the Cyprus Securities and Exchange Commission, including crypto-exchange platforms.<\/p>\n<p>Further, blockchain technology is being used by entities involved in the finance and regulatory tech space, know your client procedures and record keeping transactions. The adoption of the European Union Markets in Crypto-Assets Regulation (MiCAR) and the Distributed Ledger Technology Pilot Regime, is expected to establish new businesses with blockchain as the underlying technology.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please outline the principal legislation and the regulators most relevant to the use of blockchain technologies in your jurisdiction. In particular, is there any blockchain-specific legislation or are there any blockchain-specific regulatory frameworks in your jurisdiction, either now or envisaged in the short or mid-term?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Currently, there is no specific legislation governing the application and use of blockchain per se and therefore, there are no specific rules to be followed or any authorization requirements, when deploying the blockchain technology. However, there are some recent updates in the regulatory framework of the use cases of blockchain, i.e. crypto-assets.<\/p>\n<h4>European Union Markets in Crypto-Assets Regulation<\/h4>\n<p>The European Union Markets in Crypto-Assets Regulation (MiCAR) was adopted in April 2023, aiming to regulate crypto-assets outside the scope of the existing financial services framework, i.e. asset-reference tokens, e-money tokens, and utility tokens. In addition, MiCAR establishes uniform rules for the licencing and operation of crypto-asset service providers in relation to services offered for crypto-assets within the scope of MiCAR. Since MiCAR is a regulation, it is directly applicable to all member states of the European Union, leading to legal certainty and security. As a member state of the EU, Cyprus is actively implementing MiCAR in relation to crypto-assets and the activities of crypto-asset service providers.<\/p>\n<h4>Regulators<\/h4>\n<p>The main Cyprus regulatory bodies regarding the use of blockchain in the financial services industry are the Cyprus Securities and Exchange Commission and the Central Bank of Cyprus. Both regulators, supervise companies falling under their regulatory ambit and use the blockchain technology during their operations. Entities falling within the supervision of these two regulators are, for example, the crypto-asset service providers pursuant to the provisions of MiCAR.<\/p>\n<p>Another important stakeholder is the Deputy Ministry of Research, Innovation and Digital Strategy, responsible to develop and implement a national digital policy in Cyprus and to participate in the establishment of an enabling ecosystem for private and public use cases of blockchain.<\/p>\n<p>In addition, the Commissioner for Personal Data Protection in Cyprus is engaged for matters concerning data privacy which is relevant when handling user data in blockchain systems.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the current attitude of the government and of regulators to the use of blockchain technology in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Cyprus government embraces the introduction of blockchain technology and there is the willingness to adopt the necessary measures to establish Cyprus as a Blockchain hub and facilitate the development and application of Blockchain technology, especially in the financial services an public section modernization.<\/p>\n<p>Certain local authorities gradually begun to use blockchain for organizational purposes (e.g. issuance of certificates), the development of a platform aiming at food traceability of local and traditional products in Cyprus and the deployment of blockchain technology in the electricity market in Cyprus.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a central bank digital currency (\u2018CBDC\u2019) project in your jurisdiction? If so, what is the status of the project?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Even though the Central Bank of Cyprus is active in the discussions in relation to the application of blockchain in the banking services sector, there is not an initiative in Cyprus for the creation of a CBDC yet. However, given that Cyprus is an EU member state in Eurozone, it is expected that further guidance on the matter shall be provided at a European level.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the current approach in your jurisdiction to the treatment of cryptoassets and decentralised finance (\u2018DeFi\u2019) for the purposes of financial regulation?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Crypto-assets in Cyprus are regulated mainly under the provisions MiCAR. MiCAR regulates electronic money tokens (EMTs), asset-referenced tokens (ARTs) and utility tokens, and any activities relating to these types of crypto-assets. MiCAR, however, excludes from its scope any crypto-assets which fall within the scope of the existing financial services framework, crypto-assets which are unique and non-fungible and tokens that are non-transferable. MiCAR also establishes uniform rules for the licensing and operation of crypto-asset service providers in relation to services offered for crypto-assets within the scope of MiCAR. MiCAR is directly applicable to all member states of the European Union, since it is a regulation and, in this way, it leads to legal certainty and security.<\/p>\n<p>According to the provisions of MiCAR, a crypto-asset is a digital representation of value or of a right that it is able to be transferred and stored electronically using distributed ledger technology or similar technology. This definition has been also adopted in Cyprus\u2019 law and specifically, in the provisions of the Anti-Money Laundering Law of 2018, which recognizes crypto-asset service providers as obliged entities under its provisions with relevant anti-money laundering obligations.<\/p>\n<p>Pursuant to MiCAR, crypto-asset service providers (CASPs) are legal persons who provide one or more crypto-asset services to clients on a professional basis, provided that they obtain a licence from a member state. In effect, a CASP providing one or more of the following services from Cyprus is obliged to obtain a licence by the Cyprus Securities and Exchange Commission (CySEC), unless it is a CASP established and registered in a member state of the EU, where the CASP must follow a separate notification procedure. The relevant services are:<\/p>\n<ul>\n<li>Providing custody and administration of crypto-assets on behalf of clients;<\/li>\n<li>Operation of a trading platform for crypto-assets;<\/li>\n<li>Exchange of crypto-assets for funds;<\/li>\n<li>Exchange of crypto-assets for other crypto-assets;<\/li>\n<li>Execution of orders for crypto-assets on behalf of clients;<\/li>\n<li>Placing of crypto-assets;<\/li>\n<li>Reception and transmission of orders for crypto-assets on behalf of clients;<\/li>\n<li>Providing advice on crypto-assets;<\/li>\n<li>Providing portfolio management of crypto-assets;<\/li>\n<li>Providing transfer services for crypto-assets on behalf of clients.<\/li>\n<\/ul>\n<p>For crypto-assets that do not fall under the definition of MiCAR, the existing legal framework is applicable depending on the characteristics of each crypto-asset. The following laws may be applicable:<\/p>\n<ul>\n<li>the Investment Services and Activities and Regulated Markets Law of 2017 (implementing the European Union MIFID II Directive);<\/li>\n<li>the Alternative Investments Funds Law of 2018;<\/li>\n<li>the Prospectus Law;<\/li>\n<li>the Crowdfunding Rules; and<\/li>\n<li>the Electronic Money Laws of 2012 and 2018.<\/li>\n<\/ul>\n<p>In relation to DeFi, there are no specific regulations for such protocols. However, certain DeFi protocols such as decentralised lending platforms, are accessible to Cyprus residents.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the current approach in your jurisdiction to the treatment of cryptoassets and DeFi for the purposes of anti-money laundering and sanctions?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Crypto-asset service providers are considered as obliged entities and are subject to anti-money laundering laws. The relevant AML\/KYC rules are set out in the Anti-Money Laundering Law, as amended from time to time.<\/p>\n<p>Pursuant to the law, crypto-asset service providers, including exchanges and custodial wallet providers, are required to verify the identity of their customers and conduct due diligence on their transactions. They must also establish internal AML\/CFT policies and procedures, appoint a compliance officer, and report suspicious transactions to the relevant authorities.<\/p>\n<p>Cyprus also enforces economic and trade sanctions imposed by the United Nations and the European Union. These sanctions apply also to digital assets transactions and are implemented by the Central Bank of Cyprus in collaboration with other relevant authorities.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the current approach in your jurisdiction to the treatment of cryptoassets and DeFi for the purposes of taxation?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Cryptocurrencies are not considered as a currency in Cyprus and there is no specific tax provision in place for their treatment just yet. Hence, it is expected that cryptocurrencies will be taxed based on their nature and characteristics. In effect, crypto-assets characterised as security tokens shall be treated differently from crypto-assets characterised as utility tokens or payment tokens.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any prohibitions on the use or trading of cryptoassets in your jurisdiction? If permitted, is cryptoasset trading common?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Many individuals trade cryptocurrencies through online exchange platforms. However, the Central Bank of Cyprus, in line with the European Union\u2019s directives, has issued warnings regarding trading in virtual currencies and hence the risk averse approach of banking institutions in Cyprus towards cryptocurrencies. It is more common to see other financial institutions, mainly falling under the supervision of CySEC, to have a more open approach to cryptocurrency trading and thus we have seen licensed investment firms trading in CFDs in cryptos and also the establishment of crypto funds.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">To what extent have initial coin offerings (\u2018ICOs\u2019) taken place in your jurisdiction and what has been the attitude of relevant authorities to ICOs? If permissible, what are the key requirements that an entity would need to comply with when launching an ICO?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The rules governing ICOs vary, depending on the crypto-asset to be offered. Under MiCAR, any entity conducting an ICO must first determine the classification of the token as an ART, an EMT or other crypto-asset, to apply the relevant regulatory rules. Issuers of ARTs and EMTs must obtain authorisation from CySEC and meet prudential, governance, and consumer-protection requirements, including capital, reserve, and safeguarding rules. All issuers offering crypto-assets to the public or seeking admission to trading must prepare and publish a MiCAR compliant white paper containing detailed information on the project, rights, risks, technology, and issuer, and must notify CySEC before publication. Additionally, issuers and intermediaries must comply with anti-money laundering (AML) and know-your-customer (KYC) obligations under Cypriot law, ensure fair marketing, prevent market abuse, and safeguard investors\u2019 funds.<\/p>\n<p>The issuance of crypto-assets being classified as utility tokens, meaning that the crypto-asset intends to provide access to a good or a service supplied by the issuer, are not subject to an authorization procedure. However, before the offering to the public, the issuer must follow a notification procedure with CySEC, disclosing the white paper in accordance with the provisions of MiCAR. Similar to offerors of ARTs and EMTs, the white paper should contain detailed information about the project, the rights attached to the token, relevant risks etc. The issuer must ensure that all marketing communications are fair, clear and not misleading and consistent with the white paper.<\/p>\n<p>An entity when launching an ICO should, among others, consider very carefully:<\/p>\n<ul>\n<li>whether tokens issued are considered securities or financial instruments under MiFID II and generally MiFID II compliance;<\/li>\n<li>whether it falls within the provisions of the Prospectus Directive;<\/li>\n<li>whether it may qualify as a licensed investment scheme;<\/li>\n<li>whether it complies with legislation on AML and GDPR; and<\/li>\n<li>any possible tax implications for the parties involved.<\/li>\n<\/ul>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any legal or regulatory issues concerning the transfer of title to or the granting of security over cryptoassets?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The establishment of the ownership of tokens and virtual assets is one the most important issues to be addressed. Additionally, the recognition of blockchain technology within the sphere of existing regulations and laws is a potential issue which may arise during the transfer of a title to or the granting of security over tokens and virtual assets.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How are smart contracts characterised within your legal framework? Are there any enforceability issues specific to the operation of smart contracts which do not arise in the case of traditional legal contracts?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There is not a definite opinion to what extent smart contracts are enforceable under Cyprus law, since there is not a legal framework or precedent by the courts regarding the treatment of smart contracts. However, being a common law jurisdiction, it is expected that Cyprus will adopt the position of other common law jurisdictions, with regards to smart contracts, their application and enforceability.<\/p>\n<p>In general, admissibility issues may arise due to characteristics of smart contracts. Since smart contracts are codified and automatically performed, it is difficult to prove intention of the parties. Additionally, issues of revocation, frustration or breach of contracts remain to be addressed.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How are Decentralised Autonomous Organisations (\u2018DAOs\u2019) treated in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The operation of DAOs is not governed by any specific national regulations, other than the ones applicable to the token issuance and crypto-assets under the AML regime. In effect, the use of DAOs within the national financial ecosystem is not so common given the absence of traditional governance rules.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Have there been any governmental or regulatory enforcement actions concerning blockchain in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There have not been any important judicial decisions on the use of blockchain, smart contracts or the use of such technology at large. The current ongoing disputes relate mainly to crypto claims as a result of fraud and mismanagement of wallets.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any other generally-applicable laws, case law or regulations that may present issues for the use of blockchain technology (such as privacy and data protection law or insolvency law)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There is a considerable number of laws that must be amended to implement the use of technology within their sphere such as laws on public offerings, companies\u2019 law, AML procedures, laws on capital markets etc.<\/p>\n<p>There are other laws also that create challenges for the use of blockchain. Any application of blockchain technology must be GDPR compliant for example.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any other key issues concerning blockchain technology in your jurisdiction that legal practitioners should be aware of?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In the absence of a specific legislation on blockchain, legal practitioners should ensure that the deployment and use of blockchain based solutions align with existing laws including those relating to data protection, AML\/CFT, financial services and consumer protection. Legal professionals should therefore monitor developments closely to ensure compliance and to leverage opportunities for innovation within a secure and compliant environment.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">2506<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/118196","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=118196"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}