Casey Wagner

<div id="highlights-block_629917f2d3c27" class="highlights">
 <ul>
 <li>Cyprus’ Distributed Ledger Technology bill undergoes legal vetting after public comment period</li>
 <li>Officials are weighing the implications of passing policy before the EU releases its framework</li>
 </ul>
 
</div>



Cyprus is vetting a cryptocurrency “umbrella” bill in a bid to establish the Mediterranean nation as a premier destination for digital asset innovators and companies. 



The legislation, the Distributed Ledger Technology Bill, was published for <a href="http://mof.gov.cy/gr/%CE%B3%CF%81%CE%B1%CF%86%CE%B5%CE%AF%CE%BF-%CF%84%CF%8D%CF%80%CE%BF%CF%85/%CE%B1%CE%BD%CE%B1%CE%BA%CE%BF%CE%B9%CE%BD%CF%8E%CF%83%CE%B5%CE%B9%CF%82-%CE%B5%CE%B3%CE%BA%CF%8D%CE%BA%CE%BB%CE%B9%CE%BF%CE%B9-%CF%85%CF%80%CE%BF%CF%85%CF%81%CE%B3%CE%B5%CE%AF%CE%BF%CF%85/%CE%B4%CE%B7%CE%BC%CE%BF%CF%83%CE%B9%CE%B1-%CE%B4%CE%B9%CE%B1%CE%B2%CE%BF%CF%85%CE%BB%CE%B5%CF%85%CF%83%CE%B7-%CE%BD%CE%BF%CE%BC%CE%BF%CF%83%CF%87%CE%AD%CE%B4%CE%B9%CE%BF-%CE%BC%CE%B5-%CF%84%CE%AF%CF%84%CE%BB%CE%BF-%CE%BF-%CF%80%CE%B5%CF%81%CE%AF-%CF%84%CE%B5%CF%87%CE%BD%CE%BF%CE%BB%CE%BF%CE%B3%CE%AF%CE%B1%CF%82-%CE%BA%CE%B1%CF%84%CE%B1%CE%BD%CE%B5%CE%BC%CE%B7%CE%BC%CE%AD%CE%BD%CE%BF%CF%85-%CE%BA%CE%B1%CE%B8%CE%BF%CE%BB%CE%B9%CE%BA%CE%BF%CF%8D-%CE%BD%CF%8C%CE%BC%CE%BF%CF%82-%CF%84%CE%BF%CF%85-2021" target="_blank" rel="noreferrer noopener">public comment</a> in 2021 and is now undergoing legal vetting, Kyriacos Kokkinos, Cyprus’ deputy minister to the president for research, innovation and digital policy, told Blockworks. 



The bill focuses on clarifying policies around the digital asset industry and amends existing related laws, such as property law and tax codes.&nbsp;



“What we see as an opportunity for Cyprus and what we&#8217;re working on is to develop a new pillar of our economy,” Kokkinos said. “Through focusing on the technology sector, especially on new and disruptive technologies, like fintech and blockchain, we aim to build a new pillar of the economy that will give economic competitiveness and social prosperity.”&nbsp;



Key provisions include clarity around taxation and token issuance, plus a measure enabling the Cyprus Securities and Exchange Commission to issue related secondary legislation.



Whether the country should pass its legislation before the European Union releases its own policy is an ongoing discussion, Kokkinos said.



“Because we are members of the European Union, we will have to be very careful,” he said. “We don&#8217;t want to run ahead and regulate something then the European Union comes forward in a year with a different point of view.”&nbsp;



In an effort to coordinate policy, Cyprus lawmakers are in close contact with EU officials.



“We are fully aware of our small size, so the name of the game is collaboration with our neighboring countries, especially Greece, Israel and other geographies in the Middle East, so that we can complement each other,” Kokkinos said.&nbsp;



The plans come as countries around the world continue to grapple with how to respond to Russia’s invasion of Ukraine. Cyprus has been impacted significantly by sanctions as Russian citizens are notable contributors to the country’s tourism and banking industries.&nbsp;



Bank deposits in Cyprus held by non-eurozone residents totaled more than $6 billion in February 2022, according to the Bank of Cyprus. Before the financial crisis-induced bailout in 2013, non-eurozone deposits totaled more than $21 billion.&nbsp;



While the US and parts of Europe weigh the role that cryptocurrencies might play in aiding Russian sanction evasion, Kokkinos said Cyprus is being fully compliant.&nbsp;



“To the best of my knowledge and attention, no cryptos are being processed through Cyprus, and Cyprus is very sensitive and strict in adhering to all sanctions against Russia,” he said.



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Cyprus Looks To Become Global Crypto Hub With New Bill

Macauley Peterson

<div id="highlights-block_62260641d58c4" class="highlights">
 <ul>
 <li>FTX’s global expansion gains regulatory approval with a Europe-wide license</li>
 <li>Founder and CEO Sam Bankman-Fried turned 30-years-old on Sunday and carries a net worth of about $22 billion, Forbes estimates</li>
 </ul>
 
</div>



Global crypto spot and derivatives exchange FTX is bringing its European operations under a new corporate umbrella. FTX Europe will allow the firm’s products and services to cater to European clients via a licensed investment firm overseen by the Cyprus Financial Market Regulator (CySEC), according to a statement released Monday.



Cyprus is a member of the European Union, so licenses granted there are passportable, meaning they apply across the European economic area — which includes Iceland, Liechtenstein and Norway, but excludes Switzerland.



FTX Europe is currently headquartered in Switzerland, the statement notes, but has a regional headquarters in Cyprus, which has been a member of the EU since 2004 and completed entry into the Economic and Monetary Union in 2008.



Head of FTX Europe Patrick Gruhn was previously the chief legal officer for Digital Assets AG, a German company that handled the tokenization process for CM-Equity, a German-based securities bank that helped bring traditional stock trading to FTX customers outside the US.



European customers are currently served by the international FTX.com, but the new operation will allow FTX to align itself more closely with Europe’s regulatory apparatus. Clients who wish to move their accounts over to the new entity may do so, but it will not be mandatory.



&#8220;FTX EU has a different product offering than FTX.com — for example, we do not offer lending currently in Europe,&#8221; Gruhn told Blockworks.



<blockquote class="wp-block-quote">&#8220;This is extremely important. Crypto Derivatives are Financial Instruments in many jurisdictions (in Europe they fall under MiFID II), in order to operate in those markets you must have the proper license or you can&#8217;t be active in those markets.&#8220;</blockquote>



MiFID II refers to the <a href="https://www.esma.europa.eu/policy-rules/mifid-ii-and-mifir">Markets in Financial Instruments Directive</a>, which became the law of the land in the EU in November 2007, a key financial market regulation enabling a single market for investment services and activities across Europe.



<h3 class="wp-block-heading">FTX founder enters fourth decade</h3>



Sam Bankman-Fried, who <a href="https://www.forbes.com/sites/stevenehrlich/2021/10/06/the-richest-under-30-in-the-world-all-thanks-to-crypto/?sh=275374753f4d" target="_blank" rel="noreferrer noopener">Forbes called</a> “the world’s richest 29-year-old” last year, estimating his wealth at $22.5 billion, celebrated his 30th birthday on Sunday.



In a TV appearance on CNBC, he commented on the use of crypto to help citizens of countries with unstable currencies.



<blockquote class="wp-block-quote">&#8220;We often see a spike in digital asset activity coming when there is economic unrest in an area. I think Russia itself is almost an exception to that because of the sanctions in place have made it difficult for people to access digital assets as well as everything else.&#8221;</blockquote>



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">The past few weeks have seen huge spikes in <a href="https://twitter.com/search?q=%24BTC&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$BTC</a> &amp; <a href="https://twitter.com/hashtag/crypto?src=hash&amp;ref_src=twsrc%5Etfw">#crypto</a> activity in <a href="https://twitter.com/hashtag/Russia?src=hash&amp;ref_src=twsrc%5Etfw">#Russia</a>, <a href="https://twitter.com/hashtag/Ukraine?src=hash&amp;ref_src=twsrc%5Etfw">#Ukraine</a> &amp; other countries seeing massive devaluation of fiat currencies as <a href="https://twitter.com/hashtag/war?src=hash&amp;ref_src=twsrc%5Etfw">#war</a> rages&#8230;. <a href="https://twitter.com/FTX_Official?ref_src=twsrc%5Etfw">@FTX_Official</a>&#39;s <a href="https://twitter.com/SBF_FTX?ref_src=twsrc%5Etfw">@SBF_FTX</a> games out on <a href="https://twitter.com/CNBCi?ref_src=twsrc%5Etfw">@cnbci</a> the situation, and how <a href="https://twitter.com/hashtag/sanctions?src=hash&amp;ref_src=twsrc%5Etfw">#sanctions</a> might work on <a href="https://twitter.com/hashtag/DeFi?src=hash&amp;ref_src=twsrc%5Etfw">#DeFi</a> <a href="https://twitter.com/hashtag/ausbiz?src=hash&amp;ref_src=twsrc%5Etfw">#ausbiz</a> <a href="https://t.co/ojVwLeCqh2">pic.twitter.com/ojVwLeCqh2</a>&mdash; Will Koulouris (@WillKoulouris) <a href="https://twitter.com/WillKoulouris/status/1500631289094803463?ref_src=twsrc%5Etfw">March 7, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The <a href="https://cms.blockworks.co/?s=sanctions" target="_blank" rel="noreferrer noopener">potential use</a> of cryptoassets to evade sanctions has been a hot political topic, particularly in Washington.



Bankman-Fried, who <a href="https://cms.blockworks.co/crypto-industry-will-move-offshore-if-congress-doesnt-act-executives-warn/" target="_blank" rel="noreferrer noopener">testified</a> to the House Financial Services Committee in December about crypto regulation broadly, co-authored a policy document <a href="https://www.ftxpolicy.com/sanctions-compliance" target="_blank" rel="noreferrer noopener">published on Friday, March 4</a>, that outlines tools for maintaining compliance with sanctions. In it, he and FTX US President Brett Harrison concluded that crypto cannot be effectively used to avoid sanctions due to the necessity of crypto exchanges as fiat on- and off-ramps.



That conclusion is based not only on exchanges’ KYC and AML regimes, but also on the use of “advanced dynamic on-chain risk-analysis and transaction monitoring tools, such as <a href="https://cms.blockworks.co/?s=Chainalysis" target="_blank" rel="noreferrer noopener">Chainalysis</a> and <a href="https://cms.blockworks.co/?s=TRM+Labs" target="_blank" rel="noreferrer noopener">TRM Labs</a>, that help identify cryptocurrency transfers that originated from any known illicit or sanctioned source,” the policy document says.



Moreover, the pair argue the transparent nature of open, public blockchains rules out their use at the scale that would be required by the Russian government to work around international sanctions.



Harrison and Bankman-Fried closed by marveling at the tens of millions of dollars worth of cryptoassets that <a href="https://cms.blockworks.co/ukraine-cancels-proposed-airdrop-after-receiving-record-donations/" target="_blank" rel="noreferrer noopener">have been donated</a> to the Ukrainian government and relief organizations using crypto rails so far.



Bankman-Fried regularly extols the virtues of philanthropy in interviews and has said he <a href="https://cms.blockworks.co/sbf-explains-ftxs-growth-and-envisions-donating-wealth-to-good-causes/" target="_blank" rel="noreferrer noopener">intends to donate</a> almost all his personal income to good causes.



This story was updated on March 7, 2022 at 11:20 am ET with comments from Head of FTX Europe Patrick Gruhn.



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