Cyprus bitcoin worries “are reasonable” says Neo & Bee
Central bank warns over Bitcoin risks
(UPDATE) The Central Bank of Cyprus has issued its second warning in two months over risks related to virtual currencies, saying that the Bitcoin is not legal tender.
But the Cyprus-based Neo & Bee that is raising awareness about the virtual currency, agrees with the warnings, but adds that it would be better if local authorities helped regulate it as it would benefit consumers and businesses, alike.
“The CBC does not authorise any activity falling within its mandate unless legal compliance is ensured. Any activity without the required license is liable for breach of law,” the central bank said in an announcement.
To date, efforts by Bitcoin marketers Neo & Bee to open a channel of communication with the central bank seem to have failed, while the institution’s hesitation to deal with the matter has forced the Cyprus Stock Exchange and the regulator Cyprus Securities and Exchange Commission to put plans for the introduction or use of Bitcoin on the backburner.
Neo & Bee plans to open a series of information stores in Cyprus to raise awareness about the virtual currency, while admitting there are risks involved, just as is the case of trading in any currency, equity or commodity.
The CBC warned that there are no specific regulatory protection measures to cover losses from the use of virtual currencies if a platform that exchanges or holds them collapses and, thus, there is the risk of losing their money.
Noting some of the risks associated with virtual currencies, the CBC pointed out that there is no guarantee or legal obligation to reimburse at face value virtual currency owners, nor to reimburse them at any time.
It also said that the price of virtual currencies is subject to high volatility and it may rise sharply or even fall to zero value.
The CBC said that acceptance of virtual currencies by merchants is based on their discretion and may cease to exist at any point and with no prior notice, in other words, any merchant may refuse to accept it for payments.
The University of Nicosia has already started accepting fee payments in Bitcoin, primarily from students whose home countries have rigid and slow-paced banking systems, such as strict exchange controls.
But a UNic official had told the Financial Mirror earlier that the university did not intend to trade in the virtual currency, but only accept it as a method of payment, subsequently cashed into the local currency, the Euro.
Seeing the opportunity that lies in studying the new domain of virtual currencies, the University of Nicosia has also introduced a comprehensive framework to help develop Cyprus into a hub for Bitcoin trading, processing and banking. It has also taken the bold step of launching a Master’s Degree in Digital Currency, the first of its kind in the world.
“As the CEO of a company that is building the infrastructure surrounding the Bitcoin technology (Neo), I believe the announcement made by the Central Bank of Cyprus surrounding the dangers of using Bitcoin was reasonable,” said Neo & Bee’s Danny Brewster, adding that “innovation is always upsetting, not innovating and being left behind as the world evolves has historically proven to be far more dangerous though; if not for vested interests, then for the future generations.”
¬“We agree that anything to do with personal or corporate finances should be treated with extreme caution, including financial products offered by traditional financial institutions. That is why our business offers free education to everyone on what we offer and the Bitcoin technology, to enable individuals to make an informed decision for themselves.”
Brewster said that the fact that the Wall Street Journal responded to the Central Bank warning in a comical fashion speaks volumes of the warning’s content:
“So, is the institution – accused of failing to control the economy on the tiny Mediterranean island and allowing rampant tax avoidance and money laundering - saying Bitcoin is illegal? Not quite. Instead it warns that there are big risks associated with using the currency.”
“Regardless of the reluctance of both the Central Bank and CySEC to regulate the businesses surrounding this new technology, Neo are still committed to establishing a clear regulatory framework for Bitcoin based businesses to operate within. We are proposing a full regulatory framework to both of these regulators and directly to the government.”
“If people want to use Bitcoins they will find their own way to obtain them in an unregulated manner, even if Neo didn’t exist. So, isn’t it better for them to acquire them via a regulated market that offers some level of protection?"
SEE RECENT FINANCIAL MIRROR REPORT:
“Bitcoin store to open: UNic accepts first payment, ‘Bee’ card electronic wallet soon”
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