Cyprus: the island is ready for blockchain

As you know from the article on mining in Georgia, an impressive level of interest in crypto is easy to predict. It has to do with low national wages and generous terms for electricity bills. There is one more indicator that galvanises crypto economy in a region. Conditions the finance ministers of the Eurozone, Eurogroup, imposed upon Cyprus in 2013 have shaken people’s faith in financial institutions. The crisis marked every family and made Cypriots look for alternative ways to stash their money.

2013: the crisis made people look for alternative ways to keep their money safe

During the crisis, clients of Laiki Bank with the deposits above €100K had to lose their money. In the Bank of Cyprus, the Eurogroup confiscated about 50% of each €100K deposit. Such were the conditions imposed by European finance ministers, but they didn’t affect deposits with less than that sum. According to the rumours, the measure was intended to pose a risk to interests of some wealthy Russians who used to hold their savings in the “tax haven.”

This approach to solving problems, though, resulted in interesting consequences. The financial meltdown together with the Eurogroup’s measures nudged early crypto adopters on Cyprus to switch to the libertarian mode of thinking. That being said, everyone on the island realized they needed to look for new ways to keep their money safe.

“The 2013 crisis has indeed affected the majority of the population in both, bad and good ways,” says Angelos Hadjiphilippou, CTO at Exevior Technologies, the Cypriot company providing mining rigs. “Yes, it was hard to cope on the cash flow part, but it has also led people into a learning curve of whom to trust with the security of your funds.” Hadjiphilippou adds that cryptocurrency is playing a significant role in this transition.

“While there is still no regulation and people involved are usually described as anarchists… it works, and it works much better than any other financial system out there today.”

The government’s position has been unclear

Cyprus has always been famous for its benefits surrounding financial and tax environment. But the government’s position on blockchain has got dual nature.

“It’s almost impossible to open a corporate bank account for a blockchain startup,” says George Agathangelou, crypto-economist and chief business development officer for Universal Crypto, the Cypriot company providing educational and analytical consultancy services. Agathangelou explains that is one of the reasons why Malta won the race for the title of the “blockchain island.”

On the other hand, there are positive developments. Cyprus Securities and Exchange Commission (CySEC) announced The Innovation Hub this August. On behalf of the Hub, experts will consult for companies on regulation. They will also run industry and academic roundtables.

“CySEC together with other financial bodies on the island have recently shown support to both blockchain technology as well as the wish to achieve some crypto-regulation,” says Angelos Hadjiphilippou. He adds that the proposals put on the table are focused on protecting people from fraud.  “The positive part is that there is movement on the matter. The downside is bureaucracy as well as everything relating to government procedures. We’ll get there, but it’ll take some time.”

The innovation hub launched by CySEC is not the only initiative worth mentioning. The University of Nicosia is also a very innovative place. It is one of the few higher education institutions that accept tuition payment in the form of cryptocurrencies and offers the Master of Science degree in Digital Currency. Renowned Bitcoin experts Andreas Antonopoulos and Antonis Polemitis run 12 live online sessions for their students within that course.

2018: the ecosystem is ready for a blockchain breakthrough

“Overall, Cyprus has been a technology hub for nearly a decade,” Angelos Hadjiphilippou clarifies, “and blockchain has made its way through to the majority of Cypriot developers. There are organized communities, such as Crypto Cyprus. And being a part of it and many other international communities, I have to say, the local ones are more focused on the exchange of information and collaboration between members, rather than the commercialized communities I see abroad.”

Hadjiphilippou claims that the infrastructure and support there are strong and reliable. “I have a pretty good feeling about the blockchain ecosystem on the island.”

Cyprus Blockchain Technologies in this context is also an exciting organisation to consider. It’s a non-profit focusing on research in the field of blockchain and distributed applications. The organisation includes academic institutions, local regulators, financial institutions and banks. It delivers educational sessions, roundtable discussions and seminars with experts.

“An extensive network of double tax treaties makes Cyprus even more appealing for investors,” says Agathangelou. He believes, if CySEC provides some regulatory clarity by 2019, everybody will start talking about Cyprus again.

Despite the turbulent crypto ecosystem on the island, Cypriots seem disposed to step into the blockchain era. All it takes to start the revolution under the circumstances is a little push. Who knows, maybe the fact that Ripple donated $50 million to universities across the globe, including The University of Nicosia, will play a key role in the process.