Cyprus allows crypto trading without capital gains tax, but banks impose strict restrictions under EU MiCA rules. Learn how Travel Rule compliance, CySEC registration, and banking hurdles affect individuals and businesses in 2025.
Crypto Travel Rule Cyprus: What It Means for Travelers and Exchanges
When you send crypto from one wallet to another, especially through an exchange, you might be affected by the crypto travel rule, a global regulation requiring financial institutions to collect and share sender and receiver info for transactions above $1,000. Also known as FATF travel rule, it was created to stop money laundering and terrorist financing by making crypto transactions traceable like bank transfers. Cyprus, as an EU member, follows this rule strictly. Any crypto exchange operating there must verify the identity of both the sender and receiver — even if the transaction is between two private wallets. This isn’t just about big banks or exchanges; it impacts everyday users who send crypto for travel, remittances, or online purchases.
The FATF travel rule, a standard set by the Financial Action Task Force to combat financial crime across digital assets applies to all regulated entities in Cyprus, including local exchanges like CEX.IO and international platforms that serve Cypriot users. If you send more than $1,000 in crypto, the exchange you’re using will ask for the recipient’s name and wallet address. If they don’t have it, your transaction may be blocked. This rule doesn’t apply to peer-to-peer trades or unregulated platforms — but those carry higher risk and aren’t protected by EU law. Cyprus also enforces strict VASP registration, a requirement for crypto service providers to be licensed and monitored by the Cyprus Securities and Exchange Commission. Unregistered platforms are shut down, and users who use them risk losing funds with no legal recourse.
Some people think the travel rule is an invasion of privacy, but in Cyprus, it’s treated like any other financial compliance — similar to how cash deposits over €10,000 require ID. The goal isn’t to track your coffee purchases, but to stop criminals from using crypto to move large sums anonymously. You’ll notice this most when you try to send crypto to a new wallet or use a lesser-known exchange. The system works best when everyone plays by the same rules. That’s why Cyprus, like other EU countries, pushes for global alignment on these standards. What you’ll find below are real examples of how this rule plays out — from exchanges that got fined for skipping compliance, to users who lost access to funds because they didn’t provide proper details. These aren’t hypotheticals. They’re lessons from people who’ve been through it.