1. The Central Bank of Cyprus (‘CBC’) wishes to draw the attention of Crypto-Asset Service Providers authorised1 or registered2 in Cyprus (‘CASPs’) by the Cyprus Securities and Exchange Commission (‘CySEC’), to the European Banking Authority (‘EBA’)’s No Action letter on the interplay between Directive (EU) 2015/2366 on payment services in the internal market (‘PSD2’) and Regulation (EU) 2023/1114 on markets in crypto-assets (‘MiCA’), which was published on 10 June 2025.
Based on the provisions of the No Action letter, the EBA regards as a payment service under PSD2:
a. the transfer of crypto assets where (i) they entail electronic money tokens (‘EMTs’) and (ii) are offered and carried out by the entities on behalf of their clients; as well as
b. the custody and administration of EMTs on behalf of clients. Custodial wallets are also regarded as a payment account under the PSD2 where the wallet is held in the name of one or more clients and allows to send and receive EMTs to and from third parties.
It is further noted that, as per the No Action Letter, the following activities are explicitly not within the scope of PSD2:
- the exchange of crypto-assets for funds (including EMTs);
- the exchange of crypto-assets for other crypto-assets;
- the intermediation in the purchase of crypto-assets using EMTs.
2. Therefore, where any CASP intends to provide the services referred in points (a) and (b) above, an authorization is required under The Provision and Use of Payment Services and Access to Payment Systems Laws of 2018 to 2025, unless the CASP has entered into a partnership with a Payment Service Provider (‘PSP’) authorised to provide the relevant payment services.
CASPs are requested to conduct a self-assessment on whether the crypto asset services offered qualify as payment services, as per the provisions of the No Action letter, and are therefore subject to licensing from the CBC, unless other arrangements with an eligible PSP are made. In case a CASP needs authorisation as a payment institution to be able to provide the services defined above, the relevant application form needs to be completed and submitted to the CBC. It is noted that the application must include a receipt of the payment of the relevant application fee which should be deposited in the account - "APPLICATION FEES" with IBAN CY65 0010 0001 0000 0000 0772 3042.
Application by a Crypto Asset Service Provider for authorisation as a Payment Institution
3. The Application and supporting documentation should be submitted via the CBC’s e-platform. For further details and relevant instructions, please send an email request to licensingsection@centralbank.cy.
4. CASPs already offering the specific crypto-asset services related to EMTs which qualify as payment services must submit a relevant application for authorisation to the CBC by 20 February 2026.
On 12 February 2026, the EBA issued further Guidance on the implications to the CASPs for when the No Action Letter transitional period ends on 1 March 2026. Based on the EBA guidance, from 2 March 2026 onwards, three scenarios may arise for CASPs:
i. In the first scenario, the CASP has successfully obtained an authorisation as a PI/EMI or has partnered with a PSP authorised to provide the respective services, in which case the CASP is allowed to continue carrying out EMT transactions in a way commensurate with its PSP authorisation.
ii. In the second scenario, the CASP has submitted an application for authorisation to the CBC but has not (yet) obtained an authorisation as a PI/EMI. In this scenario, the CASP can continue to carry out EMT transactions that qualify as payment services pending its decision on the application for authorisation by the CBC, subject to certain conditions. If these conditions are met, the CASP should:
iii. In the third scenario, where the CASP has not submitted an application, or it has submitted an application but has not met one or more of the conditions articulated under the second scenario of the EBA guidance, the CASP should:
Please refer to the actual EBA Guidance for further details on the above scenarios.
5. Passporting arrangements
In case a CASP authorised or registered by CySEC additionally obtains an authorisation by the CBC as a payment institution and provides or intends to offer crypto-asset services that qualify as payment services under PSD2 on a cross-border3 basis to other EU jurisdictions, it needs to follow the notification process as specified in the relevant Commission Delegated Regulation which is binding in its entirety and directly applicable in all member states:
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1. CySEC Regulated Crypto asset entities
2. Crypto entities operating under the national transitional regime, until July 1, 2026, according to the provisions of Article 143(3) of MiCA Regulation.
3. For registered CASPs during the transitional period of MiCA, the only possibility to offer cross-border services is in the scenario in which the national regime of the host Member States (i.e., the Member State where the service is provided) allows it and where the grandfathering clause is applicable in that host member state. For further details please refer to ESMA_QA_2086.