Promising opportunities for the Blockchain industry in Cyprus

Blockchain Fest Limassol

Blockchain-Fest 2022 took place in Limassol on the 4th and 5th of May 2022. An informative event where the establishment, development, and forthcoming prospects of the Blockchain industry in Cyprus were discussed.

Methodically, separate panels were assigned to review the Blockchain ecosystem’s challenges. The first group concentrated on legalities and banking transactions, and the panelists debated on the current conditions, challenges, restrictions, and importantly the expansive opportunities of the Blockchain industry in Cyprus from legal and banking perspectives.

Blockchain Fest Limassol

For the past decade or so, FinTech financial intermediaries as well as niche service providers such as forex and gaming companies have already established their operations in Cyprus, yet a “facilitator status” for the Cryptocurrency sector is relatively nascent, and in the near future it will be tested, to prove if Cyprus is indeed a conducive environment or ecosystem for decentralized finance or DeFi.

Blockchain Fest Limassol

One of the key provisions which Cyprus delivers is the human talent pool readily available to supplement the growing demand and influx of Cryptocurrency trading companies wanting to set base in Cyprus. What remains a grey area though is the ongoing uncertainty within the banking sector, and the lack of legal infrastructure as to how transaction will be processed or conducted, with a clear set of rules for the established companies.

The financial regulatory agency where new participants need to register and follow the procedural guidelines is CySEC; the Cyprus Securities and Exchange Commission which is the accredited body controlling the Blockchain industry and overseeing Crypto assets. As Cyprus is an EU member state, CySEC’s financial regulations and operations comply with the European MiFID financial harmonization law.

Blockchain Fest Limassol

Ideally speaking, if Blockchain innovations will foster economic growth through a widely accepted and simplified legal framework, then the question is why the delay? One can assume from the expert panel conversations that every precedent seems to be in place, however more efforts are still needed to structure the specific legislation that can support the entire ecosystem and expedite Blockchain innovations.

From an official perspective, the primary objective of the legal system in Cyprus will be to create above all “legal certainty”. There are many stakeholder to be concerned about here, but as per the legal and banking framework panelists, the initial challenge is to build a structure which recognizes the legal obligations to protect DeFi investors.

For the moment, Cyprus doesn’t restrict Cryptocurrency trading. In fact, it invites blockchain startups, ICOs, and global Cryptocurrency companies. CySEC currently regulates ICOs, Token offerings and the Crypto assets of the registered companies. Therefore, a requisite for new entrants to commence operations in Cyprus is to register with CySEC.

The banking sector however is still ambiguous, and the procedural and compliance considerations as far as end-to-end Cryptocurrency transactions are concerned, are still incomplete. The banks in Cyprus continue to create a social and economic profile to assess laundering risks and from the accountabilities point of view the banks in Cyprus continue to exercise control over liquidity.

Blockchain and Cryptocurrency innovations have invigorated the digital environment in which regulated entities can legally operate. The challenge for regulators is to maintain track of the changes so that the benefits provided by new and emerging technologies are accelerated, while guaranteeing that there are adequate procedures, mechanisms, and policies in place to minimize the risks they present.