CYPRUS Law and Practice Contributed by: Angelina Fitoz, Svetlana Remezova, Darya Averyanova and Sude Dogan, Lawitt Buro
General Exclusion Pure NFTs that are unique and not used for investment or exchange purposes fall outside MiCA. Platforms trading only such collectibles generally do not require a CASP licence, but remain subject to consumer pro - tection law and GDPR. When NFTs Become Regulated NFTs enter the fintech perimeter where they resemble financial products. Fractionalised NFTs or large, uni - form series may be treated as crypto-assets under MiCA. If they grant profit or revenue rights, they are reclassified as security tokens under MiFID II. AML Overlay Even where MiCA does not apply, NFT platforms may qualify as obliged entities under AML law. Transfers above EUR1,000 trigger Travel Rule obligations, bring - ing marketplaces within supervisory oversight. Tax Treatment (2026) From 1 January 2026, gains from NFT disposals are generally taxed at 8% under the crypto regime. Only in rare cases where an NFT is treated as traditional art would different capital gains rules apply. 10.13 Stablecoins In Cyprus, stablecoins are regulated under MiCA and divided into two categories with different supervisory treatment. EMTs Versus ARTs Electronic money tokens reference a single fiat cur - rency and are treated as digital e-money. Asset-refer - enced tokens reference baskets of currencies, com - modities or crypto-assets and face stricter prudential scrutiny due to systemic risk. Core Requirements Issuers must ensure redemption at par at any time and maintain fully segregated, high-quality liquid reserves. MiCA prohibits paying interest or rewards on stable - coins to prevent them functioning as bank deposits. Supervisory Split and Deadline EMTs fall under the Central Bank of Cyprus and may be issued only by licensed credit institutions or EMIs. ARTs and related CASP services are supervised by
CySEC. By 2 March 2026, CASPs using EMTs for pay - ments must obtain or partner with a licensed EMI or bank. Usage Limits and Tax Large-scale use of non-euro stablecoins may trigger transaction caps to protect monetary stability. From 1 January 2026, gains on stablecoin disposals, includ - ing crypto-to-stablecoin swaps, are taxed at 8%.
11. Open Banking 11.1 Regulation of Open Banking
Open banking in Cyprus is based on the Payment Ser - vices Law implementing PSD2 and is now evolving towards broader Open Finance. The focus in 2026 is less on access rights and more on performance, transparency and expansion beyond payments. PSD2 Foundation Banks must provide secure Application Programming Interface (API) access to licensed Account Information Service Providers (AISPs) and Payment Initiation Ser - vice Providers (PISPs) with customer consent. Early fragmentation due to non-standardised APIs slowed fintech growth, prompting the Central Bank to push EU standards such as Berlin Group for interoperability. PSD3 and PSR Upgrades Under PSD3 and the Payment Services Regula - tion, banks must publish API uptime data and may remove screen-scraping fallbacks if dedicated inter - faces meet performance thresholds. Permission dash - boards allowing customers to manage consents have strengthened trust and adoption. Practical Inhibitors Strong customer authentication and periodic re- authentication create user friction, while smaller institutions face cost pressures in maintaining high- performance APIs. Next Phase: Open Finance Regulators are preparing for the Financial Data Access framework, which will extend data-sharing principles to investments, insurance and pensions, positioning Cyprus within a broader EU Open Data model.
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