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Marilia Paraschou

Marilia Paraschou

Cryptoassets in Cyprus: New Draft Bill

The Cyprus Ministry of Finance published this week (06/09/2021) the proposed draft of the Distributed Ledger Technology Bill for public consultation in both Greek and English.

Interested parties may provide comments and suggestions on the draft legislation by the 08/10/2021.

The bill includes the following:

• Definitions for Distributed Ledger Technology and Cryptocurrencies.

• Legal certainty regarding smart contracts and cryptocurrencies as an asset.

• Provision for the issuance of secondary legislation, by CySec for the supervision of cryptocurrency service providers.

Cryptocurrencies are digital currencies which use an online ledger and are secured by strong cryptography. Such currencies employ the blockchain technology, a method of recording information, making it almost impossible to counterfeit or double-spend.

The beginning of crypto-assets can be traced to 2008 and the conception of Bitcoin by (pseudonym) Satoshi Nakamoto, who envisioned the creation of a distributed, decentralised ledger, accessible to everyone in the world.

Although Bitcoin was first introduced as a means of exchange (a digital currency), advancements in technology and the introduction of various other types of cryptocurrencies have led to the creation of a new asset class, that of cryptoassets.

The use and popularity of Crypto-assets will increase substantially in the future. As the use of crypto-assets becomes more widespread, governments at a national level and the EU at Union level, are expected to issue new regulations and guidance in an effort to monitor such activity.

The introduction of a regulatory framework could be a positive development, it constitutes a major step in the acceptance and greater adoption of crypto-assets in Cyprus, but also will protect entrepreneurs in this area and will promote a sense of certainty and confidence to investors. Undoubtedly, cryptocurrencies are here to stay.

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