Cypriot financial regulator, CySec, has issued its second statement in regards to bitcoins this week. In its first release on the matter, CySec warned about the dangers involved in transacting with virtual currencies including “loss of money”. Overall, the statement was fairly limited, with the regulator simply referring readers to the European Banking Authority’s warning issued in December of 2013.
In its new draft, CySec issued a much more comprehensive statement providing information in Greek about how bitcoins work, the technology behind it, miners, and wallets. In the new draft, CySec focused on risks involved such as loss or theft of digital wallets, volatility in prices, and possibility of illegal transactions conducted with bitcoins due to its anonymity. Overall, the statement from CySec was similar to language from other EU regulators where they mentioned risks and explained that virtual currencies aren’t government issued, but refrained from ruling against them.
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The timing of the new warning occurred shortly after a Parliament discussion about bitcoins, which featured representatives from Neo & Bee and University of Nicosia, two major advocates of using bitcoins in the country. According to Socrates Rossides, Head of Legal Department at Neo & Bee who participated in the discussions, some of the Cypriot parliamentary members they had just learned about bitcoin for the first time this week. As a result, there was an overall lack of understanding of bitcoins and the technology behind them, even as interest among the general populace has grown. Rossides added that CySec is receiving demand to become proactive and create a framework of regulation. As such, the statement from CySec may have been on the need to create a formal opinion on the matter to allow for further discussion about the implementation of a framework of rules to be enacted by government.
Rossides concluded by stating to DC Magnates that “people will use the products that are best for them, and it is the government’s requirement to create rules to accommodate them.”