Cyprus’ finance ministry recommends ‘capacity building’ for crypto

Cyprus’s finance ministry stressed the need to accelerate its capacity building for the crypto industry.

Cyprus is moving to regulate the cryptocurrency industry, with the country’s finance ministry releasing a national risk assessment on crypto.

Published on Dec. 13, the official documentation provides a risk assessment for the Republic of Cyprus regarding money laundering risks related to virtual asset activities and virtual asset service providers (VASPs).

The Ministry of Finance of Cyprus stressed that there is a “limited direct understanding or experience” regarding money laundering risks of crypto in the country.

However, authorities like Cyprus Securities and Exchange Commission (CySEC) and local enforcement authorities have demonstrated a “sophisticated level of understanding of the sector,” the statement notes. The authorities should further explore the market and receive “in-depth training on these issues” to enhance their skills, the ministry stated.

The ministry also recommended local financial companies “adopt written policies and procedures to comply” with the wire transfer rule for virtual currencies. In the meantime, authorities should start to maintain and share data that is specific to virtual currencies and VASPs, the ministry said, adding:

“Although activity levels now are believed to be negligible, this will enable an evidence-based baseline as activities increase, promoting earlier detection of risks or changes to risk levels.”

The authority noted that Cyprus should actively collaborate with other jurisdictions experienced in the crypto industry in order to learn from these relationships and identify the best practices.

“Such international cooperation could be an important channel for Cyprus to strengthen and accelerate its capacity building for the VA/VASP sector,” the ministry wrote.

Related: Israel reportedly adopts new AML rules for crypto

One of the world’s most uncertain countries in terms of cryptocurrency regulation, Cyprus has been moving to adopt crypto-related regulations this year. In September, CySEC reportedly disclosed new details of crypto regulation policies, planning to increase cryptocurrencies by integrating European Union’s Anti Money-Laundering rules into the Cypriot laws.

The Cypriot crypto ecosystem is associated with significant uncertainty as some major financial institutions including the Bank of Cyprus were allegedly blocking Bitcoin (BTC)-related transactions this year, according to reports on social media.