The Markets in Crypto-Assets Regulation (MiCA) introduces a unified regulatory framework for crypto-assets across the European Union (EU), promoting legal certainty, investor protection, and market stability. One of the core requirements under MiCA is obtaining a Crypto-Asset Service Provider (CASP) license, mandatory for businesses offering crypto asset services.
This licensing ensures compliance with strict standards on governance, security, and anti-money laundering (AML), enabling licensed CASPs to operate seamlessly across all EU member states. Whether you are an emerging startup or an established operator, obtaining a CASP license is essential to access the EU’s vast and dynamic market for digital assets.
The Cyprus Securities and Exchange Commission (CySEC) is the competent authority overseeing CASP licensing under MiCA. Businesses operating or planning to provide crypto-asset services in Cyprus must adhere to local implementation requirements alongside MiCA’s EU-wide provisions.
Our firm has a thorough knowledge of Cypriot law, ensuring that your compliance efforts are efficient and effective.
We can help your business meet compliance requirements and unlock the potential of the EU crypto market!
In Cyprus, the CySEC is the competent authority overseeing CASP licensing under MiCA
Key Numbers about a CASP License in Cyprus
3 monthsaverage term of obtaining CASP license after application submission |
at least severaldirectors in a CASP |
up to €150kamount of the share capital depending from CASP activity |
up to 35%personal income tax (PIT) rate |
12,5%corporate income tax (CIT) rate |
20%capital gains tax (CGT) rate |
Legal Opinion about a CASP License in Cyprus
Ganna Voievodina
Manimama
|
CEO
“Obtaining a CASP license in Cyprus is essential for businesses offering crypto-asset services. Applicants must meet requirements, including robust AML/CFT compliance, a formal governance structure, and sufficient operational capital. Once licensed, CASPs must adhere to ongoing reporting obligations and maintain compliance with Cypriot and EU regulations. A CASP license enhances credibility and provides access to the EU market under a clear regulatory framework”.
Types of Activities with a CASP License in Cyprus
Providing custody and administration of crypto-assets on behalf of clients
This service means safekeeping or controlling, on behalf of third parties, crypto-assets or the means of access to such crypto-assets, where applicable in the form of private cryptographic keys. Holdings of crypto-assets on behalf of the clients shall be segregated from CASP’s holdings.
Operation of a trading platform for crypto-assets
This service contains of the management of one or more multilateral systems, which brings together or facilitates the bringing together of multiple third-party buying and selling interests for crypto-assets – in the system and in accordance with its rules – in a way that results in a contract, either by exchanging one crypto-asset for another, or a crypto-asset for funds.
Exchange of crypto-assets for funds
This service means the conclusion of purchase or sale contracts concerning crypto-assets with clients for funds by using proprietary capital.
Exchange of crypto-assets for other crypto-assets
This service means the conclusion of purchase or sale contracts concerning crypto-assets with clients for other crypto-assets by using proprietary capital.
Execution of orders for crypto-assets on behalf of clients
This service means concluding agreements to buy or to sell one or more crypto-assets or to subscribe for one or more crypto-assets on behalf of third parties and includes the conclusion of agreements to sell crypto-assets at the moment of their issuance.
Placing of crypto-assets
This service includes the marketing, on behalf of or for the account of the offeror or of a party related to the offeror, of crypto-assets to purchasers. Before placing the crypto-assets a CASP shall obtain the agreement of the issuers or any third party acting on their behalf.
Reception and transmission of orders for crypto-assets on behalf of clients
This service means the reception from a person of an order to buy or to sell one or more crypto-assets or to subscribe for one or more crypto-assets and the transmission of that order to a third party for execution.
Providing advice on crypto-assets
This service means offering, giving or agreeing to give personalized recommendations to a third party, either at the third party’s request or on the initiative of the a CASP providing the advice, in respect of one or more transactions relating to crypto-assets, or the use of crypto-asset services.
Providing portfolio management on crypto-assets
This service includes managing portfolios in accordance with mandates given by clients on a discretionary client-by-client basis where such portfolios include one or more crypto-assets.
Providing transfer services for crypto-assets on behalf of clients
This service means transfer, on behalf of a natural or legal person, crypto-assets from one distributed ledger address or account to another. Such service may be provided without virtual currency wallet opened for a CASP’s client.
Benefits of Obtaining a CASP License in Cyprus
Regulatory clarity and compliance:
- Cyprus has established a well-defined regulatory framework under the CySEC, offering legal certainty for CASPs.
- Adhering to these regulations ensures businesses operate transparently and legally.
Strong fintech and blockchain ecosystem:
- Cyprus is home to an emerging blockchain and fintech hub, with regular industry conferences and networking events.
- Government initiatives encourage innovation in digital finance and support crypto-related startups.
Attractive tax regime:
- Cyprus offers one of the lowest corporate tax rates in Europe at 12.5%, making it financially appealing for crypto businesses.
- Additional tax benefits, such as exemptions on capital gains from crypto transactions, enhance profitability.
Thriving financial and fintech ecosystem:
- Cyprus hosts a strong ecosystem of banks, payment service providers, and legal firms specializing in financial services and blockchain technologies.
- This ecosystem facilitates smooth financial transactions and compliance processes for CASPs.
EU-wide passporting under MiCA:
- CASPs are able to offer services across the EU without additional licensing.
- This enables companies to expand into 27 EU countries seamlessly.
Easy access to investment funds and venture capital:
- Cyprus is an attractive location for crypto and fintech investors looking for regulated businesses.
- A CASP license increases the likelihood of securing funding from European venture capital firms.
Our Services
STEP 1
Incorporation stage
- Company formation in Cyprus
- Provision of a registered address for 1 year
- Opening corporate bank account and transferring the share capital
- Appointment and employment of a local director
- Detailed company structure documentation
STEP 2
Pre-licensing stage
- Preparation and submission legal and financial documents (non-exhaustive list) according to MiCA
- Review of existing policies and procedures, if the company already has them
STEP 3
Licensing stage
- CASP license application assistance
- Conducting communication with the CySEC during the license process
Our Experts in this Area
Step by Step Description
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Initial setup
- Initiating a preliminary project assessment
- Creating an action plan
- Preparation and filing of the package of documents
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Company registration
- Submitting an application for an approval of company name at the Registrar of Companies and Official Receiver (RCOR)
- Facilitating the notarial process for the company’s official registration
- Incorporating the company’s data into the RCOR
- Obtaining the Certificate of incorporation issued by the local registrar, Memorandum and Articles of Association
- Registration for tax purposes
- Opening of a bank account
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Obtaining a CASP license
- Preparation of documents according to MICA
- Submission an application to the licensing authority - CySEC
- Reviewing the application to ensure it is complete (if any documents or information are missing, the applicant will be notified and given a specific deadline to provide the necessary additional documentation)
- Assessment of the documents` content submitted (a detailed review to verify that all regulatory requirements are met)
- Requesting of additional details (if applicable)
- Notification of grant or refusal of the CASP license
- Granting or refusal notification to European Securities and Markets Authority (ESMA)
- Publication in ESMA register
National Legislation of Cyprus
In Cyprus, the transition period means that applicants may continue to provide services related to the provision of crypto-asset services until July 1, 2026
Regulation:
Cyprus has not introduced a main act specifically for MiCA's implementation, the country is actively aligning its regulatory framework to ensure a seamless transition to the new EU-wide regulations.
The CySEC has issued several key documents to guide CASPs in aligning with the MiCA:
- Directive DI 73-2009-04 of the Cyprus Securities and Exchange Commission for the Markets in Crypto-Assets (Fees and Contributions) of 2024: this document outlines the fee structures for entities under MiCA.
- Guidance on Transitional Measures (October 17, 2024): CySEC provided guidance on the transition from the local CASP registration regime to MiCA.
In addition, the Ministry of Finance of Cyprus published the “Notification by the Minister of Finance for the appointment of CySEC and CBC as the competent authorities for the application of Regulation (EU) 2023/1114 on markets in crypto-assets”.
Licensing authority:
The CySEC serves as the regulatory authority overseeing CASPs under the MiCA framework. CySEC is responsible for the authorization, supervision, and enforcement of MiCA provisions within the Cypriot jurisdiction. This includes processing applications for CASP authorization, monitoring compliance with regulatory standards, and implementing transitional measures to facilitate the shift from national regulations to the MiCA framework.
Procedure, timelines, fees:
Following the full application of MiCA, i.e. after 30 December 2024, the CySEC must assess within 25 working days of receiving an application for authorisation whether all of the required information has been included in the application. At this stage, however, the CySEC will not assess the quality of the information provided. The CySEC may ask the applicant to supplement the application if some or all of the required information is missing. The CySEC will set a deadline for the submission of any missing information. After the submission of missing information, the CySEC will have 40 working days to make a qualitative assessment of the application. During this period, the CySEC has the opportunity to submit additional requests for clarification, but only the first of these requests will suspend the 40 working day assessment period, for a maximum of 20 working days.
CySec set such fees for CASPs:
- providing custody and administration of crypto-assets on behalf of clients - €10,000
- operation of a trading platform for crypto-assets - €30,000
- exchange of crypto-assets for funds - €5,000
- exchange of crypto-assets for other crypto-assets - €5,000
- execution of orders for cryptoassets on behalf of clients - €8,000
- placing of crypto-assets - €8,000
- reception and transmission of orders for crypto-assets on behalf of clients - €8,000
- providing advice on crypto-assets - €8,000
- providing portfolio managements of crypto-assets - €8,000
- providing transfer services for crypto-assets on behalf of clients - €5,000
- providing custody and administration of crypto-assets on behalf of clients - €10,000 annually
- operation of a trading platform for crypto-assets - €20,000 annually
- exchange of crypto-assets for funds - €5,000 annually
- exchange of crypto-assets for other crypto-assets - €5,000 annually
- execution of orders for cryptoassets on behalf of clients - €5,000 annually
- placing of crypto-assets - €5,000 annually
- reception and transmission of orders for crypto-assets on behalf of clients - €5,000 annually
- providing advice on crypto-assets - €8,000 annually
- providing portfolio managements of crypto-assets - €8,000 annually
- providing transfer services for crypto-assets on behalf of clients - €5,000 annually
- between €500,001 and €1,000,000 – 1% of the turnover
- between €1,000,001 and €5,000,000 – 0.4% of the turnover
- between €5,000,001 and €10,000,000 – 0.3% of the turnover
- exceeding €10,000,000 – 0.1% of the turnover
1. Notification by CySEC regulated financial entities of their intention to provide certain crypto-asset services - €10,000
2. Application for authorisation as a CASP:
The provision of more than one of the above services may be simultaneous. In such cases, the fee payable shall be the total fee corresponding to each of the services.
3. CASPs annual supervision fee - this fee is comprised of a fixed and a variable component, payable within 4 months after the end of their financial year:
- Fixed component:
- Variable component - aggregate fee in accordance with the CASP's financial turnover from crypto-asset services, if it exceeds €500,000, according to the relevant scale:
The annual supervisory fee is capped at €500,000, ensuring that no entity pays more than this maximum threshold.
Transition period:
Cyprus has adopted a transitional period of 18 months, according to which the CASPs that was registered in the CASP Register in accordance with the provisions of National Rules before 30 December 2024, may continue to provide their services until 1 July 2026, or until they are granted or refused an authorisation, whichever is sooner.
Requirements for Obtaining a CASP License in Cyprus
Capital requirements for a CASP vary depending on what services the company will provide - from €50,000 to €150,000
Physical office requirements
A CASP shall have a registered office in Cyprus where it carries out at least part of their crypto-asset services.
Requirements for key persons
-
Senior managers (directors):
- Number: MICA does not specify a minimum and maximum number of directors. However, MICA states (part 2, article 59) that there shall be at least several directors.
- Residency requirements: At least one director must be an EU resident.
- General requirements: Directories must have a solid reputation, necessary skills, and relevant experience.
- Required documents:
- a clean criminal record
- a detailed CV
- statements on time commitment and past professional conduct
-
Shareholders:
- Number: MICA does not specify a minimum and maximum number of shareholders.
- Residency requirements: There is no restriction.
- General requirements: Shareholders must have a solid reputation, necessary skills, and relevant experience.
- Required documents:
- a clean criminal record
- an ownership structure chart
Capital requirements
Capital requirements vary depending on what services the company will provide:
Class 1: A CASP authorized for the following crypto-asset services:
- 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
Minimum capital requirements - €50,000.
Class 2: A CASP authorized for any crypto-asset services under Class 1 and:
- providing custody and administration of crypto-assets on behalf of clients
- exchange of crypto-assets for funds and/or
- exchange of crypto-assets for other crypto-assets
Minimum capital requirements - €125,000.
Class 3: A CASP authorized for any crypto-asset services under Class 2 and:
- operation of a trading platform for crypto-assets
Minimum capital requirements - €150,000.
Documentation requirements
There are list of documents that must be submitted with the application:
-
Documents required for all CASPs:
- The articles of association of the applicant CASP
- Identity and proof of good repute, knowledge, skills, experience and of sufficient time commitment of the members of the management body
- Information relating to shareholders or members with qualifying holdings
- A program of operations setting out the types of crypto-asset services that the applicant CASP wishes to provide, including where and how these services are to be marketed
- A description of the applicant CASP’s prudential safeguards (insurance policy)
- A description of the applicant CASP’s governance arrangements and internal control mechanisms
- A description of the applicant CASP’s business continuity plan
- Detection and prevention of money laundering and terrorist financing (full packet of policies)
- Descriptions both in technical and non-technical language of applicant CASP’s IT systems and security arrangements
- A description of the applicant CASP’s procedures to handle complaints from clients
- Documents required in case CASP wishes to offer services in other countries:
- List of EU countries where the company wishes to offer its services
- Documents required for certain services (each of the 10 services requires its own documents):
- Custody and administration policy
- A description of the procedure for the segregation of client’s crypto-assets and fund
- The operating rules of the trading platform and market abuse detection
- Information on the exchange of crypto-assets for funds or other crypto-assets (commercial policy)
- The execution policy
- Information on the provision of advice or portfolio management on crypto-assets
- Information on transfer services
Taxes in Cyprus
The CIT rate of 12.5% applies to most companies in Cyprus
Corporate Income Tax (CIT)
Cyprus imposes a corporate income tax rate of 12.5% on the taxable profits of resident companies. This rate is among the lowest in the EU, enhancing Cyprus's appeal as a business hub.
In addition, dividends, interest and royalties are generally exempt from taxation through the application of the so-called “participation exemption” or financing exemption.
Companies engaged in cryptocurrency trading or related activities are subject to the standard CIT rate on their profits.
Capital Gains Tax (CGT)
Capital gains tax at the rate of 20% is levied on gains from the disposal of immovable property situated in Cyprus and on gains from the disposal of shares in an unlisted company which directly or indirectly (subject to conditions) owns immovable property situated in Cyprus.
Cryptocurrencies held by companies for investment purposes are typically exempt from capital gains tax upon disposal, provided they do not involve immovable property in Cyprus.
Personal Income Tax (PIT)
Individuals with annual taxable income up to €19,500 are exempt from PIT.
Income exceeding €19,500 is taxed at progressive rates, with higher income brackets subject to increased rates:
- €19,501 to €28,000 - 20%
- €28,001 to €36,300 - 25%
- €36,301 to €60,000 - 30%
- above €60,000 - 35%
Dividends and interest income are exempt.
Frequently Asked Questions
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What is a CASP license in Cyprus?A CASP license is a regulatory authorization required for companies providing cryptocurrency-related services such as exchanges, custodial services, advisory services, etc. in Cyprus.
-
Who issues the CASP license in Cyprus?The CySEC issues CASP licenses.
-
What services can be provided under a CASP license?
It allows services such as:
- 1) Providing custody and administration of crypto-assets on behalf of clients
- 2) Operation of a trading platform for crypto-assets
- 3) Exchange of crypto-assets for funds
- 4) Exchange of crypto-assets for other crypto-assets
- 5) Execution of orders for crypto-assets on behalf of clients
- 6) Placing of crypto-assets
- 7) Reception and transmission of orders for crypto-assets on behalf of clients
- 8) Providing advice on crypto-assets
- 9) Providing portfolio management on crypto-assets
- 10) Providing transfer services for crypto-assets on behalf of clients
-
What are the key requirements to obtain a CASP license in Cyprus?Companies must meet physical office requirements, requirements for managers and shareholders, minimum capital requirements, documentation requirements.
-
Is it mandatory to have a physical office in Cyprus to obtain a CASP license?Yes, a local office in Cyprus is required for regulatory oversight.
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Is there a minimum capital requirement for obtaining a CASP license?Yes, applicants must meet specific financial and operational adequacy standards, but the exact minimum capital depends on the services offered (€50,000, €125,000, €150,000).
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What is the process for applying for a CASP license?The process involves submitting an application to the CySEC with detailed documentation on the company structure, management, AML policies, and financial plans, etc.
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How long does it take to obtain a CASP license?The preparation of documents and the review process typically takes several months, depending on the completeness of the application and the authority's workload.
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Can CASPs provide cross-border services in the EU?Yes, once licensed under MiCA, CASPs can offer services across the EU without needing separate licenses in other Member States.
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Why is a CASP license necessary in Cyprus?A CASP license ensures compliance with Cypriot and EU financial regulations under the MiCA Regulation, providing legal security and consumer protection.
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