In August 2018, an ad-hoc Committee was established following a Council of Minister’s decision, prompted by the President of the House of Representatives and the Minister of Finance. The primary aim was to draft a National Strategy outlining Cyprus’s vision for Distributed Ledger Technologies (DLT), which is an integral part of Cyprus’s broader digital transformation vision. The Committee’s role is to provide guidance and recommendations for creating the necessary framework to facilitate the adoption of DLT and blockchain technologies within a 12-18-month timeframe.
The primary objective of this effort is to lay out detailed operational plans, explore potential scenarios, and define prerequisites to ensure that the Cyprus public sector can effectively leverage the capabilities of DLT. This ad-hoc group operates under the supervision of the Republic of Cyprus government and collaborates closely with the House of Representatives, involving experts and stakeholders from both the public and private sectors. The framework also considers the impact of these technologies on the labor force in Cyprus and addresses ethical concerns related to their use.
In a separate development, the Cyprus Securities and Exchange Commission (CySEC) introduced its initial regulation regarding cryptocurrencies. Cryptocurrencies enjoy legal recognition and acceptance in Cyprus, serving as legal tender. There are no plans by the government to restrict or prohibit merchants from using cryptocurrencies. This move enhances consumers’ ability to exchange goods and services for digital currencies.
The newly established regulations, known as Circular C417, are designed to ensure that Cyprus Investment Firms (CIFs) allocate resources to cover investments in cryptocurrencies and effectively manage associated risks. CIFs are required to obtain authorization from CySEC before engaging in cryptocurrency trading, as these assets were not previously regulated under financial regulations in Cyprus or at the EU level. Cyprus investment firms involved in crypto-assets and financial instruments linked to crypto-assets are advised by CySEC to review their risk management procedures and strategies, taking into account all risks associated with these products.