The Central Bank of Cyprus (CBC), while expressing disapproval of digital currencies, has clarified that “Bitcoin is not illegal,” as reported by anonymous sources in the Cyprus Mail. However, the stance of the CBC highlights the ambiguity surrounding Bitcoin and similar cryptocurrencies in the eyes of banks – they are neither considered traditional currencies nor financial instruments, and as such, they are not subject to control or regulation.
The CBC had previously expressed its disapproval of cryptocurrencies, stating on February 7th that they were not recognized as legal tender. The bank emphasized that it does not authorize any activity within its jurisdiction unless it complies with legal requirements, and unlicensed activities are considered breaches of the law.
This recent statement from the CBC might be seen as positive news for Bitcoin enthusiasts who may have been concerned about potential government crackdowns aimed at curbing tax evasion or countering a shift away from traditional banking systems perceived as working against their interests.
Cyprus, as a member of the Eurozone, has its banking affairs overseen by the European Central Bank (ECB). Any future regulations regarding digital currencies are likely to come from higher-level authorities such as the ECB.
Cyprus faced significant financial difficulties in 2012 and 2013 during the Greek debt crisis aftermath. To address these challenges, Cyprus implemented various austerity measures, including a controversial one-time levy on uninsured bank deposits. This move led to public outrage, with many considering it a confiscation of their assets. Consequently, there was a surge in interest in alternative currencies like Bitcoin, resulting in a global increase in Bitcoin’s price.
Cyprus has a history as a financial center, and with traditional banking facing skepticism from a significant portion of the population, some believe that Cyprus could potentially establish itself as a hub for Bitcoin adoption and commerce. Notably, the University of Nicosia began accepting Bitcoin for various purposes, including tuition fees, books, and meals, and even launched a Master’s degree program in Digital Currencies in response to the increased interest in cryptocurrency following the financial crisis.