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Blockchain & Cryptocurrency

In Cyprus, as is likely the case elsewhere, the topics of blockchain and cryptocurrency are at the forefront of the minds of people, and yet both topics are still very much in their infancy.

Subject to certain provisions regarding contracts for difference (CFDs), options and futures (The “Derivative on Virtual Currencies”) which can be considered as financial instruments regulated under the applicable Investments Law and require authorization by CySEC when offering investment related services, in Cyprus there are no currently specific references to cryptocurrency in the legal or regulatory framework and are not, per se, regulated.

Main aspect here is that the Central Bank of Cyprus’ related circular stated the following: “bitcoin is not illegal, but, at the same time, neither it is subject to control or regulation”. Thus, work with cryptoassets in Cyprus is conducted according to the rules of general civil law.

According to data from the existing tax legislation, we come to a conclusion that profit from trade in cryptocurrency is not taxed (rate – 0%), because “The Cyprus Tax on profits from trading in shares or other securities, including forex or bitcoins is 0%”.

On the other hand, the Central Bank of Cyprus has repeatedly indicated in its statements about virtual currencies that activities that need to be licensed should be strictly conducted in accordance with the law. At the moment, licensing for mining and crypto-trading (and for ICO) is not provided however it is essential for ICO organizers and crypto dealers to comply with the existing applicable regulatory framework. 

For a free consultation about your case, please contact as online by filling the form below or call us at 00357-22000422.

HOW PAHALAW CAN ASSIST

Our consultants, lawyers and accountants may assist potential ICO organizers and cryptoasset dealers on the following, subject to the project evaluation, based on Cyprus Law: 

  • Legal support for ICO procedure;
  • Preparation of legal opinion for the issuing of Tokens;
  • Preparation of legal opinion for CY and ESMA rules on Cryptocurrencies;
  • Assisting in development of ICO documentation, legal structuring;
  • Formation of companies for ICO;
  • Legal advice to offer cryptocurrency exchange services, mobile multi cryptocurrency wallet, cryptocurrency payment acquiring, API for integrations;
  • Legal analysis of the Cyprus regulatory framework;
  • KYC, AML and Compliance;
  • Advise on Data Protection law issues;
  • Tax advisory;
  • Drafting of shareholders’ agreement between the beneficiaries (if necessary);
  • Drafting and establishing Trusts for beneficiaries;
  • Ongoing legal advising on the matter and related issues.

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