Cyprus banks limit withdrawals after bitcoin surge

Several banks in Cyprus temporarily restricted customer withdrawals and transfers after a sharp rise in bitcoin led to concentrated account activity.

The restrictions, applied in recent days, affected online transfers to domestic crypto platforms and in-branch cash withdrawals. Some depositors reported being unable to move funds for several days.

Bank notices and customer messages cited “unusual transaction volumes” and the need to verify large or frequent transfers before processing. Bank spokespeople described the measures as short-term safeguards to manage liquidity and to meet anti-money-laundering checks during high transactional stress.

The limits affected retail and small-business accounts at several institutions, according to customers and local observers. Mobile and online banking displayed error messages or alerts prompting clients to contact branches. Some ATMs imposed withdrawal caps and teller withdrawals above set thresholds were placed on temporary hold while banks reviewed activity.

Banks said rapid outflows and concentrated requests increased operational risk and required manual review to confirm the legitimacy of transactions. Financial services sources added that a surge in new accounts appeared linked to renewed interest in buying cryptocurrency as prices climbed.

One account holder recounted: “I tried to transfer money to a crypto exchange to buy bitcoin and my account was frozen without warning. I couldn’t reach a representative for hours.”

A bank statement added the institution was working to minimize disruption, processing verifications as quickly as possible and asking customers to use multiple payment channels or contact support for urgent needs.

Local payment processors and cryptocurrency exchanges reported higher deposit and withdrawal volumes and some tightened verification standards, which slowed settlement and lengthened customer service queues.

Regulatory authorities in Cyprus are monitoring the situation and reviewing whether broader measures are needed to preserve financial stability. Analysts noted that banks commonly place temporary holds and review transactions that appear atypical for account holders.

Depositors reference the 2013 bailout and emergency measures, including haircuts on uninsured deposits, when describing concerns about access to funds. Financial advisers recommend planning large transfers in advance, keeping records for substantial transactions, and informing banks before moving significant sums.

Banks are continuing verification work while customers and market participants await further guidance from institutions and regulators about how such spikes in activity will be handled in future episodes of high market volatility.