Cyprus:

The Proposed Bill On “The Distributed Ledger Technology Law Of 2021” Is Now Under Public Consultation


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In June 2019, the Council of Ministers of Cyprus, approved the
National Strategy for Decentralized Technologies-Blockchain. The
strategy came as a result of the efforts made within the framework
of the European Cooperation in Blockchain, which was entered into
on 4 June 2018 between Cyprus, Greece, Malta, Italy, France, Spain
and Portugal, subject to the relevant Declaration of the Southern
Mediterranean Countries on Distributed Ledger Technologies (DLT) of
4 December 2018.

This initiative encouraged the use of these technologies in both
the public and private sectors (particularly relevant for the
financial services sector, where banking and investment
transactions will be transformed in the coming years). One of the
most interesting points in this strategy was that the Ministry of
Finance, in cooperation with the Tax Department and the Registrar
of Companies, would coordinate the drafting of a regulatory
framework based on certain principles set out in the strategy, to
be implemented in Cyprus.

Based on the provisions of the above, with the support of an
international expert and under the coordination of the Ministry of
Finance, a proposed bill entitled “The Distributed Ledger
Technology Law of 2021” was prepared. It is now under public
consultation.

The bill includes the following:

  • Definitions for DLT and crypto assets.

  • Legal certainty regarding smart contracts and cryptocurrencies
    as an asset.

  • Authorizing provision to CySEC for the issuance of secondary
    legislation, within the framework of its responsibilities for the
    supervision of cryptocurrency service providers.

According to the authorities, the bill aims to facilitate the
application of DLT, including blockchain technology, in a
technologically neutral way. It seeks to strike a balance between
the need for promotion and proper use of new technologies, on the
one hand and the need to avoid money laundering and to safeguard
consumer rights, on the other.

Αccording to the Ministry, the bill aims to provide legal
certainty for the purpose of promoting the proper use of smart
contracts in Cyprus. Moreover, additional important matters are
included in this legislative initiative such as the proof of, and
the transfer of, ownership of digital coins and the issue of
digital signatures.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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