Cryptocyrrencies Bitcoin, Litecoin, Ethereum, dogecoin with trditional money. Photo: iStock
Cryptocurrencies have had a horror week in the market. Image: iStock

Cyprus has become an unlikely frontrunner in global preparations for the widespread use of cryptocurrencies, according to a recent study.

Crypto Head, a digital-currency educator, ranked the small Mediterranean island as the second-most-ready nation to welcome the brave new world of cryptocurrencies, beating the financial powerhouses Singapore, Hong Kong and the United Kingdom.

Only the US proved to be more prepared, scoring 7.13 out of 10 in Crypto Head’s analysis, giving the United States a 0.66-point edge over Cyprus.

A spokesman for Crypto Head said: “There were some interesting findings in our Crypto Ready Index. We were also very surprised to see Cyprus scoring second worldwide. Our study found that 25-30% of residents researched the topic in 2020/2021.”

The crypto-readiness study looked at 200 countries and territories to see which were the most prepared by analyzing the number of crypto automated teller machines in operation, usage ability in banks, and the number of online searches about cryptocurrencies.

Looking at crypto ATMs, the study found that the US had 17,436 such machines, far outstripping Canada, which came in second with 1,464. The UK, which ranked fifth in the study, had 200 ATMs for cryptos, resulting in one for every 333,984 persons.

Interestingly, Cyprus has no crypto ATMs at all, but made up for this shortcoming in interest. Crypto Head found that 33,941 people per 100,000 searched for cryptocurrencies between May of last year and April of this year.

“This level of interest is the highest of any country in the world and is a 139.6% increase from the previous year,” Crypto Head said.

“While there are no crypto ATMs, Cyprus allows the ownership and usage of cryptocurrencies in banks, bringing its ‘readiness’ score up the charts.”

Promoting Cyprus as a forward-thinking financial hub has formed part of the long-term economic strategy of the island in recent years as the government slowly maneuvers itself away from the sun-sea-and-sand image most commonly associated with it.

As a result, Cyprus is already home to a large number of foreign-exchange brokerages, partly thanks to the country having one of the lowest corporate tax rates in the European Union at 12.5%, but also to the concerted efforts made by governmental bodies such as Cyprus Invest to promote the island’s strategic position abroad as a place to do business and a commerce portal between the East and the West.

However, having one eye on the future has not come at the expense of caution. With crypto assets being considered high-risk, and with many remaining unregulated in the EU, the Cyprus Securities Exchange Commission (CYSEC) has ordered that all virtual-assets service providers must be approved and registered, in order to provide better protection to investors. 

In a recent speech, Finance Minister Constantinos Petrides further laid out his vision for the island, describing it as a “business-friendly green and digital economy that nurtures entrepreneurship, for the benefit of all.”

He said: “The use of new technologies in a rapidly changing world is a prerequisite for remaining competitive, otherwise you risk staying behind. We need to provide a series of digital services to citizens and through this digital transformation, to transform the fabric of the state itself.”

As part of the island’s transition from tourist destination to corporate hotspot, it was announced last month that the Cyprus Stock Exchange (CSE) would be privatized and a strategic investor found by the end of 2022.  

Petrides said: “Finding a strategic investor will be decisive in developing the stock market as an alternative and additional platform for finance, for the economy and businesses alike.”

With Cyprus emerging as one of the top investment fund centers in Europe, offering access to high-growth markets, George Campanellas, chief executive of Invest Cyprus, has welcomed the latest initiative from the Finance Ministry, lauding the island’s determination “to stay at the forefront of industry developments and continuously upgrade its legislative and regulatory regime” to remain attractive to investors.

However, economic experts who have been following the country’s gradual shift away from the tourism cash cow of yesteryear, say the privatization of the CSE isn’t only a welcome step, but a necessary one if the island is to capitalize on its growing reputation as an emerging investment fund center.

Marios Christou, who heads the Centre of Economic Studies at the University of Nicosia (UNIC), said: “The evolution of the CSE will additionally provide strong support to the broader efforts of the Cyprus government to establish Cyprus as a financial services hub.

“The oft-cited intention to attract important investment funds to Cyprus can only be successful if the country exhibits a strong and efficient capital market. Enhancing the CSE will, therefore, be a strong move forward in realizing such an important strategic objective.”

Andrea Busfield has been in journalism for more than 25 years, working as a reporter, features editor and copy editor for UK national newspapers, the chief civilian print editor of Sada-e Azadi in Kabul, and deputy editor of Gulf Times in Qatar. A published author, she now works as a freelance journalist based in Cyprus.