Global practice doesn’t provide a single answer to the question of how crypto-assets and other rights in the field of digital technologies and distributed registries should be regulated. Many governments are concerned about regulatory issues in this area, especially with regard to crypto-assets. This sphere has gone through many stages of development from complete rejection to the desire of regulators to streamline and control the activities of market participants.
Recently, in Cyprus, which is considered one of the advanced fintech centers, a special body has been created aimed at establishing a dialogue between local financial regulators and firms engaged in new financial technologies. Market participants who implement such technologies are offered support. The most suitable form of blockchain technology market regulation is now developing on the island. A detailed action plan is being prepared and will be released soon.
In this article, we will consider the main issues of crypto-assets regulation in Cyprus. The material will be of interest to entrepreneurs who intend to start a crypto business in Europe or Asia.
Currently, there are no specific rules for the regulation of crypto assets in Cyprus, and cryptocurrencies are not regulated. It is worth noting that there are also no requirements for licensing the crypto business in Cyprus, any restrictions regarding mining.
However, the Central Bank of Cyprus (CBC), issued a series of warnings to potential cryptocurrency investors. The regulator wants to draw attention to the risks associated with virtual currencies that are not considered “legal tender” in Cyprus, and any activity related to cryptocurrencies is not authorized.
Risks associated with cryptocurrencies
CBC has identified and made public the main risks associated with cryptocurrencies:
- lack of guarantees or legal obligations for reimbursement;
- critical price volatility of virtual currencies;
- use for illegal activities, including money laundering and crime financing;
- weak security of the cryptocurrency, the possibility of its theft from an electronic wallet.
In this regard, the Cypriot financial regulator has developed new rules to regulate derivatives for virtual currencies. The rules state that activities related to cryptocurrencies are not currently regulated by the official regulatory authorities of Cyprus and that derivatives for cryptocurrencies can now be qualified as financial instruments in accordance with the law, which provides for investment activities and the management of regulated markets.
In addition, if you intend to register a crypto company in Cyprus, please pay attention to the obligations when providing investment services for derivatives in cryptocurrencies:
- sufficient capital;
- respect the interests of customers, act on the most favorable conditions for the client;
- provide non-misleading information, as well as warn customers about potential risks.
Businessmen who plan to register an ICO in Europe, Asia or the USA should consider that in Cyprus there is no ban on ICOs. It is noted that, at the same time, it is necessary to ensure that the way the ICO is conducted does not go against the legal provisions.
Last year, the Cypriot regulator issued a consultative document regarding the prevention and suppression of money laundering, which is important to consider for those who wish to register a crypto exchange in Cyprus.
If you have any questions regarding the regulation of crypto activities in Cyprus, do not hesitate to contact IQ Decision UK experts. Experienced specialists will advise you and help you better understand the specifics of the requirements of the law. We also offer the necessary support in registering a crypto exchange in Cyprus or in setting up a cryptocurrency exchange in this jurisdiction. Our services will help you go through registration procedures faster and with less time and effort.