Cyprus is vetting a cryptocurrency “umbrella” bill in a bid to establish the Mediterranean nation as a premier destination for digital asset innovators and companies.
Bank deposits in Cyprus held by non-eurozone residents totaled more than $6 billion in February 2022, according to the Bank of Cyprus.
The legislation, the Distributed Ledger Technology Bill, was published for public comment in 2021 and is now undergoing legal vetting, Kyriacos Kokkinos, Cyprus’ deputy minister to the president for research, innovation and digital policy, told Blockworks.
The bill focuses on clarifying policies around the digital asset industry and amends existing related laws, such as property laws and tax codes.
“What we see as an opportunity for Cyprus and what we’re working on is to develop a new pillar of our economy,” Kokkinos said. “Through focusing on the technology sector, especially on new and disruptive technologies, like fintech and blockchain, we aim to build a new pillar of the economy that will give economic competitiveness and social prosperity.”
Key provisions include clarity around taxation and token issuance, plus a measure enabling the Cyprus Securities and Exchange Commission to issue related secondary legislation.
Whether the country should pass its legislation before the European Union releases its own policy is an ongoing discussion, Kokkinos said.
“Because we are members of the European Union, we will have to be very careful,” he said. “We don’t want to run ahead and regulate something then the European Union comes forward in a year with a different point of view.”
In an effort to coordinate policy, Cyprus lawmakers are in close contact with EU officials.
“We are fully aware of our small size, so the name of the game is collaboration with our neighboring countries, especially Greece, Israel and other geographies in the Middle East so that we can complement each other,” Kokkinos said.
The plans come as countries around the world continue to grapple with how to respond to Russia’s invasion of Ukraine. Cyprus has been impacted significantly by sanctions as Russian citizens are notable contributors to the country’s tourism and banking industries.
Bank deposits in Cyprus held by non-eurozone residents totaled more than $6 billion in February 2022, according to the Bank of Cyprus. Before the financial crisis-induced bailout in 2013, non-eurozone deposits totaled more than $21 billion.
While the US and parts of Europe weigh the role that cryptocurrencies might play in aiding Russian sanction evasion, Kokkinos said Cyprus is being fully compliant.
“To the best of my knowledge and attention, no cryptos are being processed through Cyprus, and Cyprus is very sensitive and strict in adhering to all sanctions against Russia,” he said.