Cyprus regulators seem intent on making up ground on the perception that they let things slide before the banking crisis.
Lately we have seen Cyprus’ financial regulator CySEC make some interesting pronouncements on issues such as client bonuses, tax evasion and money laundering, in attempt (in our view) to ‘lay down the law’ and make it clear to both investors and the firms it regulates that there is a strong hand in charge at the wheel. Probably not a bad idea every once in a while.
Now it appears to be the turn of CySEC’s banking counterpart in Cyprus. The Central Bank of Cyprus has issued a warning bringing ‘attention to the risks associated with virtual currencies’ — basically a warning for retail investors, traders and consumers on the lurking dangers of using Bitcoin.
The Central Bank’s warning didn’t go so far as to ban Bitcoin activity on the island, but did state that it ‘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.’
Now does this mean a ban, or that we’re headed toward a ban? Probably not. The Central Bank’s release also stated that ”acceptance of virtual currencies by merchants is based on their discretion’ — meaning that merchants in Cyprus are indeed allowed to accept Bitcoin, and brokers can offer it for trading, but that it is a buyers-beware market.
Many of Cyprus’ forex and binary brokers have introduced Bitcoin trading over the past few months — mainly BTCUSD pair and binary trading — with volumes becoming significant during times of high Bitcoin volatility. A Bitcoin trading ban would certainly not be welcomed by the brokerage crowd.
To see the Central Bank of Cyprus warning on Bitcoin click here.
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