The year 2022, like no other, is rich in turmoil and long-term turbulence in the world crypto market. Despite this, the state of the markets of individual countries is assessed not by the number of scandals, but by taking into account the complex criteria of introduction and regulation of cryptocurrencies in the national economy. In early November, the EUBlockchain Research Center presented a report that assesses the development of the blockchain industry in the European Union.
According to the EUBlockchain report, Cyprus is at the forefront of the development of the blockchain ecosystem. Several factors allowed Cyprus to gain such status.
Some facts: currently there are 48 suppliers of blockchain solutions in the country, the amount of attracted funds is more than 150 million dollars. An important positive marker - the loyalty and interest of the population to cryptocurrencies and blockchain in general is more than 2.5%.
The State provides significant support to technology companies. In particular, the Innovation Hub was established in 2018, a three-stage strategy for regulating the use of blockchain in the private and public sectors was adopted, and attractive conditions for technology companies-developers were created. Since 2014, the National University of Nicosia has offered training in blockchain technology, DeFi, and Metaverse development.
Cyprus today is primarily concerned with the transformational effects of blockchain technology in its public and private sectors. Island continues to work on developing a common blockchain structure at the national level. For example, the CySEC (Cyprus Securities and Exchange Commission) regulatory sandbox project was included in the Cyprus Sustainability and Development Plan to enable FinTech companies, startups and other innovative companies to expand new products and services. The initiative is expected to be launched by mid-2023. At the level of the Deputy Minister of Research, Innovation and Digital Policy of Cyprus, with the involvement of the University of Nicosia, a project is being implemented to create a fully functioning national EBSI infrastructure.
Specifics of state regulation
Despite significant efforts by the Government in the development and implementation of blockchain technologies and cryptocurrencies, legislative instruments have not yet been adopted and are under development. The first draft of the law was developed in 2019, in 2021 it was published for public discussion. Parliament is expected to approve the law before the end of 2022.
According to industry experts, the adoption of the bill and, as a consequence, 100% legal status for cryptocurrencies and blockchain platforms, would take Cyprus to a new level in the global crypto market.
Place of Cyprus in the European cryptosphere
Recent attempts by the authorities to harmonize regulations within the EU have not yet borne fruit. As a result, not all EU member states are at the same level of development and implementation of blockchain technologies and cryptocurrencies. In the picture below, EUBlockchain experts have distributed all European Union countries by the degree of involvement in the crypto system.
Figure 1: regulatory curve
Cyprus, along with the United Kingdom, Switzerland, and France - the largest economies of the European Union - occupies a leading position in the creation of conditions for technological entrepreneurship, the development of innovative projects, the creation of academic programs. The implementation of the National Strategy would enable Cyprus to reform the national economy and adopt modern business models. The adoption of laws expected by the entire industry will allow to remove cryptocurrency and DeFi from the «grey zone», to include them in the national economic structure, to ensure the security of investors and users. Cyprus certainly has the potential to occupy a leading position in the EU in terms of digital transformation and the possibility of becoming a "technologically clean" island.
