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Cyprus: Status of Bitcoin

(June 6, 2014) The University of Nicosia, one of the largest English-language universities in the Mediterranean region, is the first accredited university worldwide to accept Bitcoin in lieu of tuition. Moreover, in the spring of 2014, it started a new master’s degree program in Digital Currencies. The University has also suggested to the Cyprus government that it initiate the establishment of a comprehensive framework for developing Cyprus into a hub for Bitcoin trading, processing, and banking. (University of Nicosia Digital Currency Initiative, University of Nicosia website (last visited June 6, 2014).)

Thus far, Cyprus has not enacted legislation to regulate the use of Bitcoin as a virtual currency. On February 7, 2014, the Central Bank of Cyprus (CBC) issued a statement warning the public of the risks inherent in the use, trading, and ownership of Bitcoin. It reiterated that virtual currencies are not legal in Cyprus. The CBC emphasized that it does not endorse any activities involving Bitcoin that fall within its purview, unless it can guarantee the legality of such activities, and that the exercise of activities without the required permission violates the relevant legislation. (Press Release, Attention to the Risks of Fake Currencies, Central Bank of Cyprus website (Feb. 7, 2014).)

The CBC reminded the public of the following risks associated with the use of Bitcoin:

· price volatility;
· the lack of guarantees or legal obligation for recuperation of financial losses; and
· the potential use of trade in virtual currencies to cover illegal activities. (Id.)

Finally, it encouraged the public to be aware of such risks prior to engaging in activities involving Bitcoin. (Id.)