Cyprus is drafting crypto rules and may implement them ahead of EU regulations.

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According to a government official, Cyprus has prepared its own legislation to regulate crypto assets and is likely to adopt it before Europe completes a common regulatory framework. He added that the authorities in Nicosia support the “judicious” use of cryptocurrencies.

According to the European Innovation Scoreboard, Cyprus has an “enviable position” in the EU when it comes to innovation, with the second-best progress last year, according to the country’s Deputy Minister for Research, Innovation, and Digital Policy Kyriacos Kokkinos. Digital assets, entrepreneurship, and financial technology were all discussed at the event.

The minister walked a fine line between embracing innovation and adhering to laws when commenting on the future of digital assets in Cyprus, including cryptocurrencies, the Cyprus Mail reported on Thursday. Kokkinos elaborated as quoted by the English-language daily newspaper:

I can tell you that Cyprus welcomes the use of digital and crypto assets, but we still need to be very careful and respect not only the regulations currently in place but also the absence of any regulations.

The government representative gave an example with Malta, the regulatory framework of which attracted many crypto companies and investors but also led to increased scrutiny and investigations into some of its companies and banking institutions. “We have to be careful of the frameworks of the European Union since we are a member state,” Kokkinos emphasized.

The deputy minister then revealed that the Cyprus government has already drafted a “very attractive bill on crypto assets.” The legislation has been published and interested parties can review it, he pointed out. The executive power has also commissioned a New York-based firm to assist the island nation with the implementation of the regulations.

“Our challenge is not being aligned with the EU, it’s about the dilemma of whether to wait for the ECB to finalize their own regulatory framework or do we go alone on our own, with the former scenario also involving the possibility of that framework being overregulated,” Kyriacos Kokkinos remarked. “My answer is that we will go at it alone while respecting the rules,” he added.

The deputy minister acknowledged that certain challenges exist, including some disagreements between the government and the Central Bank of Cyprus (CBC). “We must remember that the CBC is subject to the ECB and central banks tend to be conservative, so our job is to challenge them through the debates we are having with them,” he told the audience at the event which took place in Larnaca.