Bitcoin is Legal, Says Central Bank of Cyprus

Despite disapproving of digital currencies, the Cypriot bank says it can only warn of the risks of using bitcoin.

AccessTimeIconFeb 26, 2014 at 3:05 p.m. UTC
Updated Sep 14, 2021 at 2:08 p.m. UTC
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“Bitcoin is not illegal” say anonymous sources from the Central Bank of Cyprus (CBC), according to a report by the Cyprus Mail.

The fact remains that bitcoin is in a grey area for banks – neither a currency nor a financial instrument – and the sources warned that the digital currency isn't “subject to control or regulation”.

The Cypriot bank has recently indicated disapproval of cryptocurrencies, stating on 7th February that they were not classified as legal tender:

“The CBC does not authorise any activity falling within its mandate unless legal compliance is ensured. Any activity without the required license is liable for breach of law.”

The latest statement should, therefore, come as good news to bitcoiners fearing a government crackdown to limit rampant tax evasion as people desert a banking system they see working against their interests.

In actual fact, as a member of the Eurozone, Cyprus’s banking affairs are overseen by the European Central Bank and any future legislation of digital currencies is likely to be passed down from there.

Cash crisis

During 2012 and 2013, Cyprus experienced crippling financial problems in the fallout from the Greek debt crisis. In the months that followed, it implemented a host of austerity measures, including an infamous one-time levy on all uninsured bank deposits.

Cypriots were enraged by the move, seeing it as a robbery of the people. Interest in alternative currencies rose dramatically, causing a spike in the global price of bitcoin.

The country has a history as a financial centre and, with traditional banking deemed as a failure by much of the population, some expect Cyprus will forge a new future as a centre of bitcoin use and commerce.

Since the crisis, the University of Nicosia has started accepting bitcoin for everything from tuition fees to books and meals, and is even offering a Masters degree in Digital Currencies.

More recently, the world’s first brick-and-mortar bitcoin deposit and financial services portal, Neo, opened its flagship branch in Nicosia, with the aim of being a ‘bank’ for bitcoin.

CBC image via Yiannis Kourtoglou / Shutterstock.com

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